Ophelia O'Brien, VP of Consumer Credit of American First Banks (AFB), monitors the default rate on personal loans at the AFB member banks.One of her standards is "no more than 5% of personal loans should be in default." On each Friday, the default rate is calculated for a sample of 500 personal loans.Last Friday's sample contained 30 defaulted loans.Using $\alpha$= 0.10, the observed z value is _______.
A)1.03
B)-1.03
C)0.046
D)-0.046
E)1.33

Question

Quizplus · Accepted Answer

The observed z value is calculated using the formula: z = (p̂ - p) / √(p(1-p)/n), where p̂ = 30/500 = 0.06, p = 0.05, and n = 500. Plugging in these values gives z = (0.06 - 0.05) / √(0.05*0.95/500) ≈ 1.03.

Ophelia O'Brien, VP of Consumer Credit of American First Banks α\alphaα

Ophelia O'Brien, VP of Consumer Credit of American First Banks $\alpha$