Solution-Set up the null and alternative hypotheses needed

Set up the null and alternative hypotheses needed

Reference no: EM132474188

The bad debt ratio for a financial institution is defined to be the dollar value of loans defaulted divided by the total dollar value of all loans made. Suppose that a random sample of 7 ca banks is selected and that the bad debt ratios (all written as percentages) for these banks are 6, 7, 6, 5, 8, 5, and 8.

(a) Banking officials claim that the mean bad debt ratio for all Midwestern banks is 3.5 and that the mean bad debt ratio for ca banks is higher. Set up the null and alternative hypotheses needed to attempt to provide evidence supporting the claim that the mean bad debt ratio for ca banks exceeds 3.5. (Round answers to 1 decimal place.)

H₀: μ < versus H_a: μ >.

(b) Assuming that bad debt ratios for ca banks are approximately normally distributed, use critical values and the given sample information to test the hypotheses you set up in part a by setting α equal to .01. HINT: You need to find the sample mean and sample standard deviation in order to find the t value. (Round answers to 3 decimal places.)

Reference no: EM132474188

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Set up the null and alternative hypotheses needed

Reference no: EM132474188

Reference no: EM132474188

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