Conducting a hypothesis test

Reference no: EM1311570

Home mortgage interest rates for 30-year fixed-rate loans vary throughout the country. During the summer of 2000, data available from various parts of the country suggested that the standard deviation of the interest rates was .096 (The Wall Street Journal, September 8, 2000). The corresponding variance in interest rates would be (.096)² = .009216. Consider a follow-up study in the summer of 2001. The interest rates for 30-year fixed rate loans at a sample of 30 lending institutions had a sample standard deviation of 0.109. Conduct a hypothesis test using H₀: σ² = .009216 to see whether the sample data indicate that the variability in interest rates changed. Use α = .05.

a. State the null and alternative hypotheses.

H₀: σ² =

H_a: σ² ≠

b. Calculate the value of the test statistic (to 2 decimals).

c. The p-value is

d. What is your conclusion?

Reference no: EM1311570

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