The default rate on small business loans in Europe in recent years has been 16%.

Question

The default rate on small business loans in Europe in recent years has been 16%. A financial analyst in America wants to know if the default rate on small business loans in the U.S. is any different than the rate in Europe. He selects a random sample of small business loans in the U.S. in recent years and determines how many were defaulted. Then he runs a hypothesis test using alpha = .05. If the p-value of the test was .133, then the correct conclusion is

reject HO. The percentage of small business loans defaulting in the U.S. is different than the 16% rate of Europe

reject HO. There is not enough evidence to say the percentage of small business loans defaulting in the U.S. is different than the 16% rate of Europe

fail to reject HO. The percentage of small business loans defaulting in the U.S. is different than the 16% rate of Europe

fail to reject HO. There is not enough evidence to say the percentage of small business loans defaulting in the U.S. is different than the 16% rate of Europe

Explanation / Answer

The estimate p-value is larger than 0.05 level of significance means that you shoud accept the null hypothesis. Your correct answer is

fail to reject HO. There is not enough evidence to say the percentage of small business loans defaulting in the U.S. is different than the 16% rate of Europe

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