Assignment:
Assume that the two samples are independent simple random samples selected from normally distributed populations. Do not assume that the population standard deviations are equal, unless your instructor stipulates otherwise.
Confidence Interval for Mortgage Payments Use the sample data shown below to construct a 98% confidence interval estimate of the difference between the mean FICO credit score of borrowers with high interest rates and the mean FICO credit score of borrowers with low interest rates. What does the result suggest about the FICO credit rating score of a borrower and the interest rate that is paid?
Exercise
Hypothesis Test for Mortgage Payments Simple random samples of high-interest (8.9%) mortgages and low-interest (6.3%) mortgages were obtained. For the 40 high-interest mortgages, the borrowers had a mean FICO credit score of 594.8 and a standard deviation of 12.2. For the 40 low-interest mortgages, the borrowers had a mean FICO credit score of 785.2 and a standard deviation of 16.3 (based on data from USA Today). Use a 0.01 significance level to test the claim that the mean FICO score of borrowers with high-interest mortgages is lower than the mean FICO score of borrowers with low-interest mortgages. Does the FICO credit rating score appear to affect mortgage payments? If so, how?