Question

A mortgage specialist would like to analyze the average mortgage rates for Atlanta, Georgia. He collects data on the annual percentage rates APR In % for 30-year fixed loans as shown in the following table. 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 4.2%? Test the hypothesis at the 10% level of significance. (You may find it useful to reference the appropriate table: Z table or t table) G Squared Financial Best Possible Mortgage Hersch Financial Group Total Mortgages Services ells Fargo Quicken Loans Amerisave 4.1258 4.250 4.250 4.375 4.375 4.500 4.750 Source: MSN Money.com; data retrieved October 1, 2010. Click here for the Excel Data File a. Select the null and the alternative hypotheses. Оно» 焱110: μ s 4.2; HA: μ > 4.2 b. Calculate the value of the test statistic. (Round intermediate calculations to at least 4 decimal places and final answer to 2

Answer 1

I have used MINITAB software

Steps

1. Enter the data as follows
2. Stat-Basic Statistics-One sample t
3. 
4. Options
5.   
6. ok-ok

Output

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b) The test statistic=2.2683 =2.27

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c)P-value=0.0319=0.03

$0.025\leq 0.03< 0.05$

Hence,

$0.025\leq P-Value< 0.05$

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d)

Significance level=0.1

Reject H₀,Since p value is smaler than significance level.

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e) As we rejected H₀ we can say that the mean mortgage rate exceeds 4.2%

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