Jim Cramer hosts CNBC’s “Mad Money” program. Mr. Cramer regularly makes suggestions about which stocks to buy and sell. How well has Mr. Cramer’s picks performed over the past two years (2005 to 2007)? To answer the question a random sample of Mr. Cramer’s picks was selected. The name of the stock, the buy price of the stock, the current or sold price and the percent return were recorded.
a. Estimate with 95% confidence the mean return for all of Mr. Cramer’s selections.
b. Over the two-year period the Standard and Poor’s 500 Index rose by 16%. Is there sufficient evidence to infer that Mr. Cramer’s picks have done less well?