Purchase Solution

Five Step Hypothesis Test for a Mortgage Rate

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A recent article in the Wall Street Journal reported that the 30-year mortgage rate is now less than 6 percent. A sample of eight small banks in the Midwest revealed the following 30- year rates (in percent):

4.8 5.3 6.5 4.8 6.1 5.8 6.2 5.6

At the .01 significance level, can we conclude that the 30-year mortgage rate for small banks is less than 6 percent? Estimate the p-value.

Solution Summary

The solution gives step by step procedure for the testing of a hypothesis problem related to mortgage rate. Five step procedure with interpretations of the results obtained are given. Interactive excel sheet is also provided. The user can edit the inputs and obtain the complete results for a new set of data.

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The null hypothesis tested is
H0: The 30-year mortgage rate for small banks is =6 %
H1: The 30-year mortgage rate for small banks is < 6 %

Please see attached for the rest of the solution.

A recent article in the Wall Street Journal reported that the 30-year mortgage rate is now
less than 6 percent. A sample of eight small banks in the Midwest ...

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