Question

Starting in 1998, a series of cred card usage studies have been performed by Sallie Mar, a major provider of educational loans and savings programs. In a recent pilot study, a random pool of 122 loan applicants attending 4-year colleges had their credit card data pulled for analysis. The sample mean credit card balance was $3173. The standard deviation was $3216.

(e) To the extent possible, check the validity of the conditions associated with your confidence interval in part (d). (part d answer was 0.1432,0.02338).

(f) Explain carefully how you would use your confidence interval in part (d) to perform a two-sided test of whether a quarter of all balances exceed $10,000. What decision is appropriate? What level of significance is implied in this test?

Answer 1