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Along with interest rates, life expectancy is a component in pricing financial annuities. Suppose that you...

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Statistics

Along with interest rates, life expectancy is a component inpricing financial annuities. Suppose that you know that last yearlife expectancy was 77 years for your annuity holders. Now you wantto know if your clients this year have a longer life expectancy, onaverage, so you randomly sample n=20 of recently deceased annuityholders to see actual age at death. Using a 5% level ofsignificance, test whether or not the new data shows evidence ofyour annuity holders now live longer than 77 years.

Here are the sample data (in years of life): 86 75 83 84 81 7778 79 79 81 76 85 70 76 79 81 73 74 72 83

a) Does this sample indicate that life expectancy has increased?Test an appropriate hypothesis and state your conclusion (use a 5%level of significance).

b) For more accurate cost determination, suppose you want toestimate the life expectancy to within one year with 95%confidence. How many randomly selected records would you now needto sample?

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aas test statistic is not in critical region we can not    See Answer
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