In a study, professor Michael LaCour-Little selected independent random samples

ID: 3178982 • Letter: I

Question

In a study, professor Michael LaCour-Little selected independent random samples of mortgages that were refinanced and mortgages that were not refinanced. (Source: Michael LaCour-Little, "Another Look at the Role of Borrower Characteristics in Predicting Mortgage Prepayments, " Journal of Housing Research, Volume 10, Issue 1.) Of the 115 refinanced mortgages, the mean mortgage rate was 8.62 with a sample standard deviation of 0.55. Of the 130 mortgages that were not refinanced, the mean mortgage rate was 8.09 with a sample standard deviation of 0.66. Suppose you intend to conduct a hypothesis test on the difference in population means. In preparation, you call the sample of mortgages that were refinanced sample 1 and the sample of mortgages that were not refinanced sample 2. Organize the provided data by completing the following table:

Explanation / Answer

Sample 1

Sample 2

n1 = 115

n2 = 130

µ1

µ2

M1 = 8.62

M2 = 8.09

s1 = 0.55

s2 = 0.66

There are no population standard deviations only sample standard deviations are given. Since hypothesis test is the difference between the population mean. Therefore, Ho: µ1 = µ2 and Ha: µ1 µ2