Problem 1 Bankrate.com reports mortgage loan interest rates for 30-year and 15-y

Question

Problem 1 Bankrate.com reports mortgage loan interest rates for 30-year and 15-year fixed-rate mortgage loans for 9 randomly selected Willamette Valley lending institutions. Assuming normality, a financial analyst would like to determine whether there is a difference between mean 30-year rates and mean 15-year rates. Lending Institution 6.715 6.748 6.706597 6.425 6.8806.9006.675 6.790 6.599 6.367 6.550--6.362 -6.162 -6.583_6.800 6.394-1-6.540 30-Year State null hypothesis and alternative hypothesis. (4 points) Ho: Ha: a) b) Calculate the value of the test statistics. Specify the test statistic ("" or t") clearly. (6 points) Find the p-value using the appropriate table. Draw the curve and highlight the corresponding area. (4 points) e) d) At the 05 significance level, do you reject or retain the null hypothesis? Circle the correct answer and explain using the p-value found in part c). (2 points) Reject Ho/Retain Ho Why? Interpret the result, this includes the weight of evidence, the conclusion, and the significance level. (4 points) e)

Explanation / Answer

a. H0: Means are equal Ha: Means are not equal

b. Anova on R

F-statistic:  5.79

degree of freedom 1,16

Df Sum Sq Mean Sq F value Pr(>F)  
Year 1 0.2076 0.20758 5.79 0.0286 *
Residuals 16 0.5736 0.03585
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Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

C. P-value = 0.0286

D. At significanmce level .05, We reject H0. Because the p-value is < .05

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