Ophelia O'Brien, VP of Consumer Credit of American First Banks $\alpha$

question 105

Multiple Choice

Ophelia O'Brien, VP of Consumer Credit of American First Banks (AFB) , monitors the default rate on personal loans at the AFB member banks.One of her standards is "no more than 5% of personal loans should be in default." On each Friday, the default rate is calculated for a sample of 500 personal loans.Last Friday's sample contained 38 defaulted loans.Using $\alpha$ = 0.10, the appropriate decision is to _______.

• A)reduce the sample size
• B)increase the sample size
• C)reject the null hypothesis
• D)fail to reject the null hypothesis
• E)do nothing

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