Ophelia O\'Brien, VP of Consumer Credit of American First Banks (AFB), monitors

Question

Ophelia O'Brien, VP of Consumer Credit of American First Banks (AFB), monitors the default rate on personal loans at the AFB member banks. One of her standards is "no more than 5% of personal loans should be in default." On each Friday, the default rate is calculated for a sample of 500 personal loans. Last Friday's sample contained 30 defaulted loans. The critical value for z for a one-tailed test with the tail in the left end is 1.645 and the obtained value is-1.24. The appropriate decision is reduce the sample size increase the sample size reject the null hypothesis fail to reject the null hypothesis do nothing

Explanation / Answer

1) ,the appropriate decision is reject the null hypothesis. beacause obtained value that is -1.24 lies in the rejection area ( that is left of the critical value (1.645) ).

2) if the p- value for a one tailed test is 0.019. then null hypothesis would be rejected or not rejected depending on the value of the statistic and the critical value.

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