A bank has recently acquired a new branch and thus has customers in this new region....

A bank has recently acquired a new branch and thus has customers in this new region. They are interested in the default rate in their new region. They wish to test the hypothesis that the default rate is different from their current customer base. They sample 200 files in area A, their current customers, and find that 20 have defaulted. In area B, the new customers, another sample of 200 files shows 12 have defaulted on their loans. At the 10% significance level can we say that the default rates are different?

Expert Solution

Conclusion

It is concluded that the null hypothesis Ho is not rejected. Therefore, there is not enough evidence to claim that the default rates are different at the 0.10 significance level.

orchestra answered 2 years ago

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