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. Ophelia's null hypothesis is _______.
A) p 0.05
B) p = 0.05
C) n = 30
D) n = 500
E) n = 0.05

Question

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. Ophelia's null hypothesis is _______.
A) p > 0.05
B) p = 0.05
C) n = 30
D) n = 500
E) n = 0.05

Quizplus · Accepted Answer

The null hypothesis is typically a statement of no effect or no difference. In this context, it would be that the default rate is equal to the standard, which is 5% or 0.05.