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

question 73

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 appropriate decision is ___.

• A)reduce the sample size
• B)increase the sample size
• C)reject the null hypothesis
• D)do not reject the null hypothesis
• E)do nothing

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Definitions:

Depreciation Expense

The allocated amount of the cost of an asset that is written off as an expense over its useful life.

Sales Price

The sum of money that a purchaser spends to acquire a product or service from a vendor.

Contribution Margin

The revenue remaining after deducting variable costs, which can be used to cover fixed costs and contribute to profit.

Variable Costs

Costs that change in proportion to the level of production or business activity.