Question

A recent article in The Wall Street Journal reported that the home equity loan rate is now less than 4%. A sample of eight small b in the Midwest revealed the following home equity loan rates (in percent): 4.1 5.3 3.6 3.6 4.9 4.6 5.0 4.4 At the 0.01 significance level, can we conclude that the home equity loan rate for small banks is less than 4%? Estimate the p-val Click here for the Excel Data File a. What is the decision rule? (Negative amount should be indicated by a minus sign. Round your answer to 3 decimal places.) Reject HO: p 2 4 and fail to reject H1: u < 4 when the test statistic is

Answer 1

Given, level of significance =0.01 Sample observations n=8 To test, Ho:124 and Alternative hypothesis Hyu<4 At 7 degrees of freedom and at 0.01 level of significance and one-tailed test, t-critical value = -2.998 Decision rule: Reject Ho:124 and Fail to reject H :p<4 when the test statistic is less than -2.998