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

question 24

Multiple Choice

Ophelia O'Brien, VP of Consumer Credit of Credit First Banks (CFB) , monitors the default rate on personal loans at the CFB 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 30 defaulted loans.Using $\alpha$ = 0.10, the observed z value is ___.

• A)1.03
• B)-1.03
• C)0.046
• D)-0.046
• E)1.33

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Definitions:

Fixed Costs

Costs that do not vary with the volume of output, such as rent, salaries, and insurance.

Target Net Profit

The desired bottom-line profit that a company aims for after all expenses have been subtracted from revenue.

Safety Margin

The difference between your actual or projected sales and the sales level needed to break even.

Tax Rate

The percentage at which an individual or corporation is taxed by the government, which can vary based on income level, type of income, or legal entity type.