Derrick has obtained a $139,000 5/1 30 year ARM at 5%. during the first 3 years, he has an option of paying interest only, if he
2 answers:
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Answer:
Since is a right tailed test the p value would be:
Comparing the p value with the significance level we see that
so we can conclude that we have enough evidence to reject the null hypothesis, and the mean for group 1 is significantly higher than the mean for the group 2
Step-by-step explanation:
Data given
represent the mean for sample 1
represent the mean for sample 2
represent the sample standard deviation for 1
represent the sample standard deviation for 2
sample size for the group 2
sample size for the group 2
Significance level provided
t would represent the statistic (variable of interest)
Concepts and formulas to use
We need to conduct a hypothesis in order to check if the mean for category 1 is higher than the mean for category 2, the system of hypothesis would be:
Null hypothesis:
Alternative hypothesis:
We don't have the population standard deviation's, so for this case is better apply a t test to compare means, and the statistic is given by:
(1)
And the degrees of freedom are given by
t-test: Is used to compare group means. Is one of the most common tests and is used to determine whether the means of two groups are equal to each other.
With the info given we can replace in formula (1) like this:
P value
Since is a right tailed test the p value would be:
Comparing the p value with the significance level we see that
so we can conclude that we have enough evidence to reject the null hypothesis, and the mean for group 1 is significantly higher than the mean for the group 2