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Question

Find the sample proportions and test statistic for equal proportions. Find the $p$-value.

Home equity loan default rates in two banks: $x_1=36, n_1=480, x_2=26, n_2=520$, $\alpha=.05$, right-tailed test.

Solution

VerifiedAnswered 1 year ago

Answered 1 year ago

Step 1

1 of 7We will be solving for the test statistic and $p$-value for a right-tailed test comparing two proportions. As such, the hypotheses are as follows:

- $H_0:\pi_1-\pi_2\leq0$,
- $H_0:\pi_1-\pi_2>0$.

For this scenario, we are checking if the home equity loan default rate is higher in the second bank significantly than the first.

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