Question

A bond analyst is analyzing the interest rates for equivalent municipal bonds issued by two different states. At α = 0.05, we wish to test whether there is enough evidence to conclude that there is a difference in the interest rates paid by the two states. What is the value of the test statistic? State A State B Sample size 80 50 Mean interest rate (%) 4.0 4.5 Population variance 0.04 0.03

Answer 1

Answer: 15.08

Step-by-step explanation:

The test statistic for difference between two population means is given by :-

$z=\dfrac{\overline{X}-\overline{Y}}{\sqrt{\dfrac{\sigma_x^2}{n_x}+\dfrac{\sigma_y^2}{n_y}}}$

Given :                             State A   State B

Sample size                       80            50

Mean interest rate (%)        4.0           4.5

Population variance           0.04        0.03

Then , the test statistic for difference between two population means will be :-

$z=\dfrac{4.0-4.5}{\sqrt{\dfrac{0.04}{80}+\dfrac{0.03}{50}}}\\\\\Rightarrow z=15.0755672289\approx15.08$

Hence, the value of the test statistic will be 15.08 .