One of the most popular ways to estimate an unknown parameter is the confidence interval. Instead of just using a point estimate, it gives an interval estimate. This gives more information about the unknown parameter. In this assignment, we will examine confidence interval.
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Using R, compute the sample mean of closing price of Johnson and Johnson's (JNJ) daily stock prices.
Using R, compute the standard deviation. Also, compute the 90%, 95%, and 99% confidence intervals for the true mean closing JNJ stock price.
Based on 3, discuss the pattern you see from these three confidence intervals and explain why such a pattern exists.
What is the advantage(s) and disadvantage(s) of increasing the confidence levels? Explain.
Interpret the confidence intervals you've calculated from part 3.