Recently, Experian Reported That the Average Credit Score for a New-

question 101

Multiple Choice

Recently, Experian reported that the average credit score for a new- car loan was 753. Suppose Ally Financial, a bank holding company that finances car loans, would like to test the hypothesis that the average credit score has increased since the Experian report. A random sample of 20 new- car loans had an average credit score of 764.2 with a sample standard deviation of 34.5. Ally Financial would like to set α = 0.05. Which one of the following statements is true?

• A)Because the p- value is less than α, we fail to reject the null hypothesis and conclude that the
• B)Because the p- value is less than α, we reject the null hypothesis and cannot conclude that the average credit score for a new- car loan is more than 753.
• C)Because the p- value is greater than α, we reject the null hypothesis and conclude that the average credit score for a new- car loan is more than 753.
• D)Because the p- value is greater than α, we fail to reject the null hypothesis and cannot conclude that the average credit score for a new- car loan is more than 753.

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Definitions:

Book Value

Book value is the value of a company or asset as recorded on the balance sheet, calculated by subtracting liabilities from assets.

Net Income

The total revenue minus total expenses of a company, representing the profit or loss over a specified period.

Total Common Equity

The sum of a company's shareholders' equity, excluding preferred shares, represented by common stock, retained earnings, and other accumulated comprehensive income.

Cash Flow Per Share

A financial metric that represents the amount of cash generated by a company, per share, over a specific period.