document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1174679>Question 1174679</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A mortgage is a type of loan that is secured by a designated<BR>\n" );
document.write( "piece of property. If the borrower defaults on the loan, the<BR>\n" );
document.write( "lender can sell the property to recover the outstanding debt.<BR>\n" );
document.write( "The following data are outstanding principal balance of home<BR>\n" );
document.write( "mortgages foreclosed by the bank due to default by the<BR>\n" );
document.write( "borrower during the last 3 years obtained from a random<BR>\n" );
document.write( "sample of 12 foreclosed mortgages:<BR>\n" );
document.write( "95,982; 81,422; 39,888; 46,836; 66,899; 69,110; 59,200; 62,331; 105,812; 55,545; 56,635; 72,123\r<BR>\n" );
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document.write( "Test the claim that the average outstanding balance of home<BR>\n" );
document.write( "mortgages is less than 80,000.\r<BR>\n" );
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document.write( "a. Using a 0.05 level of significance.<BR>\n" );
document.write( "b. Using a 0.10 level of significance.<BR>\n" );
document.write( "c. Using a 0.01 level of significance. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #800691 by </B><A HREF=/tutors/aboutme.mpl?userid=Boreal><B>Boreal(15235)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Boreal><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Boreal><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=800691\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> Ho: mean >=$80000<BR>\n" );
document.write( "Ha: mean < $80000<BR>\n" );
document.write( "alpha=0.05 (initially) p{reject Ho|Ho true}<BR>\n" );
document.write( "test stat is a t df=11 reject Ho if t < -1.796<BR>\n" );
document.write( "mean is $67698.58<BR>\n" );
document.write( "s is $19,184.79<BR>\n" );
document.write( "calculation t=(x bar-mean)/s/sqrt(n)=-12301.42*sqrt(12)/19184.79<BR>\n" );
document.write( "=-2.22<BR>\n" );
document.write( "Will reject the hypothesis at both the 5% and the 10% level.<BR>\n" );
document.write( "At the 1% level, the critical value is -2.718 and would fail to reject at that significance level.<BR>\n" );
document.write( "p-value=0.024\r<BR>\n" );
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document.write( "This means that at the 0.05 and 0.10 levels of significance we conclude that the true value of the average outstanding value of the mortgages is < $80000 but not conclude that at the 1% level. </SPAN>\n" );
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