The provider of the credit application information hasadvertised that it approve

Question

The provider of the credit application information hasadvertised that it approves 50% of all applications.
(a) Does the information provided in the data set support theproviders advertising claim? Use (alpha) = 0.05
There are 200 applications and 88 of those areapproved.

(b) Find the p-value for the above situation. The provider of the credit application information hasadvertised that it approves 50% of all applications.
(a) Does the information provided in the data set support theproviders advertising claim? Use (alpha) = 0.05
There are 200 applications and 88 of those areapproved.

(b) Find the p-value for the above situation.

Explanation / Answer

phat=88/200 =0.44 (a) The test hypothesis is Ho:p=0.5 Ha:p not equal 0.5 The test statistic is Z=(phat-p)/p*(1-p)/n =(0.44-0.5)/sqrt(0.5*0.5/200) =-1.7 Given =0.05, Z(0.025)=-1.96 (check normal table) Since Z=-1.7>-1.96, we do not reject Ho. So we can not concludethat the information provided in the data set support the providersadvertising claim. (b) p-value is 2*P(Z

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