Question: An insurance company states that it settles 85% of all life insurance claims within 30 days. A consumer group asks the state insurance commission to investigate. In a sample of 250 life insurance claims, 203 were settled within 30 days.
a. Test whether the true proportion of all life insurance claims made to this company that are settled within 30 days is less than 85%, at the 5% level of significance.
b. Compute the observed significance of the test.