Business statistic

Final Review Part 1 Name _________________________

1. Bankrate.com reports mortgage loan interest rates for 30-year and 15-year fixed-rate mortgage loans for 9 randomly selected lending institutions. Assuming normality, a financial analyst would like to determine whether there is a difference between mean 30-year rates and mean 15-year rates.

	Lending Institutions
	1	2	3	4	5	6	7	8	9
30 year	6.72	6.75	6.74	6.60	6.43	6.88	6.90	6.68	6.80
15 year	6.60	6.37	6.55	6.36	6.16	6.58	6.80	6.39	6.54

Ho: There is no difference n = df = alpha = 5%

Ha: There is a difference mean of differences =

standard deviation of differences =

Decision and interpret results:

2. A large discount chain compares the performance of its credit managers in Ohio and Illinois by comparing the mean dollar amounts owed by customers with delinquent charge accounts in these two states. Ten delinquent accounts were randomly selected from Ohio and 10 delinquent accounts were randomly selected from Illinois. We are testing at 95% confidence whether there is a difference between the population mean dollar amounts owed by customers with delinquent charge accounts in Ohio and Illinois.

Ohio: n = 10 xbar = $524 s = $68

Illinois: n = 10 xbar = $473 s = $22

Ho: There is no difference

Ha: There is a difference

Decision and interpret results:

3. A telephone company wants to determine whether the appeal of a new security system is higher with homeowners compared to renters. Independent samples of 140 homeowners and 60 renters are randomly selected. Each respondent views a TV pilot in which a test ad for the new security system is embedded twice. Afterward, each respondent is interviewed to find out whether he or she would purchase the security system. Results show that 25 out of the 140 homeowners definitely would buy the security system, while 9 out of the 60 renters definitely would buy the system. Test for a higher proportion of homeowner purchases at 95%.

Ho: There is no difference or homeowner proportion is smaller

Ha: Homeowner proportion is greater

Sample proportion for homeowners:

Sample proportion for renters:

Grand proportion:

Decision and interpret results: