Question

Suppose Bank of America would like to investigate if credit score and income level of an individual are independent of one another. To that end, Bank of America selected a random sample of 400 adults and asked them to report their credit score range and their income level range. The following contingency table summarizes the results. Income Less than $50.000 $50,000 to less than $100,000 $100,000 to less than $150,000 More than $150,000 Less than 650 26 63 40 21 Credit Score 650-750 30 53 30 17 More than 750 24 44 30 22 Question 21 (1 point) Assuming that credit score and income level are independent of one another, the expected number of individuals with income less than $50,000 and credit score between 650 and 750 for this sample is: O24.0 O 52.0 O 32.5 O 26.0 Question 22 (3 points) Based on the table above, the test statistic value for the appropriate method to test the independence of credit score and income level is: 3.320 O 10.576 O 1.766 07.051 Question 23 (1 point) The degrees of freedom for the critical value associated with the appropriate test for this study is: 04 05 03 06 Question 24 (1 point) Using significant level of a = 0.01, the critical value for the appropriate hypothesis test for this study is: O 12.592 O 13.277 O 16.812 09.488

Answer 1

Excel: Data --> Megastat -->Chi-square Contingency Table Test for Independence

Chi-square Contingency Table Test for Independence Row 1 Observed Expected Row 2 Observed Expected Row 3 Observed Expected Row 4 Observed Expected Total Observed Expected Col 1 26 30.00 63 60.00 40 37.50 21 22.50 150 150.00 Col 2 30 26.00 53 52.00 30 32.50 17 19.50 130 130.00 Col 3 24 24.00 44 48.00 30 30.00 22 18.00 120 120.00 Total 80 80.00 160 160.00 100 100.00 60 60.00 400 400.00 3.320 chi-square 6 df .7678 p-value

Critical value = 16.812 [using Excel function CHIINV(0.01,6)]

Answers:

21. 26.0

22. 3.320

23. 6

24. 16.812