Exercise #6

Problem 1

In New York State, savings banks are permitted to sell a form of life insurance called savings bank life
insurance (SBLI). The approval process consists of underwriting, which includes a review of the
application, a medical information bureau check, possible requests for additional medical information and
medical exams, and a policy compilation stage in which the policy pages are generated and sent to the bank
for delivery. The ability to deliver approved policies to customers in a timely manner is critical to the
profitability of this service to the bank. During a period of one month, a random sample of 27 approved
policies was selected, and the total processing time, in days, was as shown below:

73 19 16. 64 28. 28 31 90 60 56 31 56. 22 18. 45 48 17 17 17 91. 92. 63 50 51 69 16 17

1. Construct a 95% confidence interval estimate for the population mean processing time.
2. What assumption must you make about the population distribution in order to construct the
confidence interval estimate in (a)?
3. Do you think that the assumption needed in order to construct the confidence interval estimate in
(a) is valid? Explain.

Problem 2

In a survey of 1,200 social media users, 76% said it is okay to friend co-workers, but 56% said it is not
okay to friend your boss. (Data extracted from “Facebook Etiquette at Work,” USA Today, March 24,
2010, p. 1B.)

a. Construct a 95% confidence interval estimate for the population proportion of social media users
who would say it is okay to friend co-workers.
b. Construct a 95% confidence interval estimate for the population proportion of social media users
who would say it is not okay to friend their boss.
c. Write a short summary of the information derived from (a) and (b).