Question
H0: = 5, Ha: > 5
at significance level = 0.01. You conclude that:
Suppose the time that it takes a certain large bank to approve a home loan is Normally distributed with mean (in days) and standard deviation = 1. The bank advertises that it approve loans in 5 days, on average, but measurements on a random sample of 500 loan applications to this bank gave a mean approval time of = 5.3 days. Is this evidence that the mean time to approval is actually longer than advertised? To answer this, test the hypotheses
H0: = 5, Ha: > 5
at significance level = 0.01. You conclude that:
Ha should be rejected. there is a 5% chance that the null hypothesis is true.
H0 should be rejected.
H0 should not be rejected.
Explanation / Answer
Here we will compute z=5.3-5/1/sqrt(500))=-6.7
Now we need to find p value P(z>-6.7)=1
As p value is greater than significance level H0 should not be rejected