A mortgage specialist would like to analyze the average mortgage rates for Atlan

Question

A mortgage specialist would like to analyze the average mortgage rates for Atlanta, Georgia. He studies the following sample APR quotes. These are the annual percentage rates (APR) for 30-year fixed loans. If he is willing to assume that these rates are randomly drawn from a normally distributed population, can he conclude that the mean mortgage rate for the population exceeds 4.50%? Test the hypothesis at a 10% level of significance. Use Table 2. Use the p-value approach. a-1. Select the null and the alternative hypotheses. H_0:mu greaterthanorequalto 4.50; H_A: mu 4.50 H_0: mu = 4.50; H_A: mu notequalto 4.50 a-2. Calculate the value of the test statistic. Approximate the p-value. 0.050

Explanation / Answer

a-1) Option II.

a-2) t=(xbar-mu)/(s/sqrt n)

=(4.6079-4.5)/(0.2539/sqrt 7)

=1.12

a-3) Option II.

a-4) Option II.

b-1Critical t at df=7 and alpha=1.415.

b-2) Option III.

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