Reference no: EM132852825

An insurance company that sells different life insurance policies is investigating expanding its "disability insurance" products. To help determine the extent and type of offerings, the company needs to know its target market. A survey of 320 adults was drawn, and each person was asked to choose his/her preferred new policy.

Response codes showed that 63 individuals wanted just life insurance with a 2% discount, 125 wanted just disability insurance with a 2% discount, 45 wanted life and disability insurance with a 3% discount, and 87 wanted life and health insurance with a 5% discount.

Question #1: Compute the sample target market defined as the sample proportion of adults who chose "disability insurance with a 2% discount" as their preferred new policy.

Question #2: Compute the standard error of the target market.

Question #3: Test whether the target market is larger than 35%. Use a 10% significance level and the p-value approach.

Question #4: Construct the appropriate one-sided approximate 90% confidence interval for the target market. Is this interval consistent with your conclusion in Question #3 above? Explain.

Question #5: What sample size is needed if the company wishes to be 98% confident that their estimate is within 0.02 of the true target market value.