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BA 240
W. Li
Practice Final
1
Problem 1
:
Bankrate.com reports mortgage loan interest rates for 30-year and 15-year fixed-rate
mortgage loans for 9 randomly selected Willamette Valley lending institutions.
Assuming normality, a financial analyst would like to determine whether there is a
difference between mean 30-year rates and mean 15-year rates.
Lending Institution
1
2
3
4
5
6
7
8
9
30-Year
6.715
6.748
6.740
6.597
6.425
6.880
6.900
6.675
6.790
15-Year
6.599
6.367
6.550
6.362
6.162
6.583
6.800
6.394
6.540
a)
State null hypothesis and alternative hypothesis. (4 points)
Ho:
Ha:
b)
Calculate the value of the test statistics. Specify the test statistic (“z” or t”) clearly. (6 points)
c)
Find the
p
-value using the appropriate table. Draw the curve and highlight the
corresponding area. (4 points)
d)
At the .05 significance level, do you reject or retain the null hypothesis? Circle the correct
answer and explain using
the p-value found in part c).
(2 points)
Reject Ho / Retain Ho
Why?
e)
Interpret the result, this includes the weight of evidence, the conclusion, and the
significance level.
(4 points)

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W. Li
Practice Final
2
Problem 2
: A large discount chain compares the performance of its credit managers in Ohio and
Illinois by comparing the mean dollar amounts owed by customers with delinquent
charge accounts in these two states. 10 delinquent accounts were randomly selected
from Ohio and 10 delinquent accounts were randomly selected from Illinois. Here
we would like to test whether there is a difference between the population mean
dollar amounts owed by customers with delinquent charge accounts in Ohio and

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