Quantitative Economic / Mathematics – Statistics
Directions: Using the following data, you must test the variances and the means for two sets of fixed and variable rate loans. You must provide four EXCEL printouts using either DATA ANALYSIS or PhStat2. All printouts must done using the same add-in software package. You are also required to provide two six-step hypothesis testing procedure write-ups, one for each problem. You should report the p-values and interpret their meaning.
Submit all files through the Exam II Take Home Dropbox. It is worth 25 points (25%) toward the second exam. Remember to try to make your answer as close to perfect as possible as I will be a pain in grading it.
A loan officer compares the interest rates for 48-month fixed rate auto loans and 48-month variable interest rate auto loans. Two, independent, random samples for fixed and variable auto loan rates provided the following results. Five 48-month fixed-rate auto loans had the following rates:
3.75% 4.50% 3.99% 4.25% 3.99%
Five 48-month variable-rate loans had the following rates:
3.59% 3.75% 3.69% 3.50% 3.80%
1. 8 pts
a) Is there enough evidence to indicate a difference in the variances of the interest rates for these fixed and variable rate loans? Assume α = .05
1 pt.
b) What is the p-value for this problem?
1 pt.
c) Is your answer sensitive to α? How do you know?
2 pts.
d) What have you decided? What does it tell you to do?
2.
9 pts
a) Is there enough evidence to indicate that the mean interest rate for fixed-rate loans is greater than the mean interest rate for variable-rate loans? Assume α = .05
1 pt.
b) What is the p-value for this problem?
1 pt.
c) Is your answer sensitive to α? How do you know?
2 pts.
d) Which type of loan would you recommend? Why?
