Question

Ophelia O'Brien, VP of Consumer Credit of American First Banks (AFB), monitors the default rate on personal loans at the AFB member banks. One of her standards is "no more than 5% of personal loans should be in default." On each Friday, the default rate is calculated for a sample of 500 personal loans. Last Friday's sample contained 30 defaulted loans. Using α = 0.10, the critical z value is _______.

Answer 1

This is right tailed test, for α = 0.1
Critical value of z is 1.28.
Hence reject H0 if z > 1.28

CRitical z value is 1.28