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Question

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

Home equity loan default rates in two banks: x1=36,n1=480,x2=26,n2=520x_1=36, n_1=480, x_2=26, n_2=520, α=.05\alpha=.05, right-tailed test.

Solution

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Answered 1 year ago
Answered 1 year ago
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We will be solving for the test statistic and pp-value for a right-tailed test comparing two proportions. As such, the hypotheses are as follows:

  • H0:π1π20H_0:\pi_1-\pi_2\leq0,
  • H0:π1π2>0H_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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