Chi square test for loan data
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There are three loan officers at Farmer National Bank. All decisions on mortgage loans are made by one of these officers. The president of the bank would like to be sure that the rejection rate is about the same for the three officers. A sample of 200 recent applications yielded the following results. Is the rejection rate related to the officer that processes the loan? Use the 0.05 significance level.
Loan Officer
Felix Otis Foxburrow
Approved 50 70 55
Rejected 10 10 5
Total 60 80 60
a. State the null and alternate hypotheses.
H0: _____________________________________________________________________
H1: ______________________________________________________________________
b. State the decision rule.
_____________________________________________________________________________
_____________________________________________________________________________
c.
c. Compute the value of the test statistic.
d. What is your decision regarding the null hypothesis? Interpret the result.
_____________________________________________________________________________
_____________________________________________________________________________
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Solution Summary
The solution provides step by step method for the calculation of Chi square test statistic for loan data . Formula for the calculation and Interpretations of the results are also included.
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