Hypothesis Testing

A loan officer wants to compare the interest rates for 48-month fixed-rate auto loans and 48-month variable-rate auto loans.

Two independent, random samples of auto loans are selected. A sample of eight 48-month fixed-rate auto-loans have the following loan rates:

4.29%, 3.75%, 3.50%, 3.99%, 3.75%, 3.99%, 5.40%, 4.00%

while a sample of five 48-month variable-rate auto loans have the loan rates as follows:

3.59%, 2.75%, 2.99%, 2.50%, 3.00%

Test statistic and the corresponding p value s are listed below:

 Test Statistic p Value 3.7431 0.0032


  • Set up the null and alternative hypotheses needed to determine whether the mean rates for 48-month fixed-rate and variable-rate auto loans differ.
  • Identify the test you will apply to test the hypothesis. Justify your choice.
  • Choose an appropriate level of significance.
  • Define type I and type II errors in the context of your hypotheses.
  • State your decision regarding the hypothesis.
  • State the conclusion.

Submission Details:

  • Submit a Microsoft Word document that contains your responses to assignment questions, using APA style.
  • Name your document SU_BUS7200_W2_ LastName_FirstInitial.doc