Suppose Bank of America Would Like to Investigate If the Credit

question 109

Multiple Choice

Suppose Bank of America would like to investigate if the credit score and income level of an individual are independent of one another.Bank of America selected a random sample of 400 adults and asked them to report their credit score range and their income range.The following contingency table presents these results. Based on the critical value approach and using α = 0.01,which of the following the decision and conclusion for this hypothesis test would be?

• A) The test statistic is greater than the critical value;we reject the null hypothesis and cannot conclude that credit score and income are independent of one another.
• B) The test statistic is greater than the critical value;we cannot reject the null hypothesis and can conclude that credit score and income are independent of one another.
• C) The test statistic is less than the critical value;we cannot reject the null hypothesis and cannot conclude that credit score and income are not independent of one another.
• D) The test statistic is less than the critical value;we reject the null hypothesis and cannot conclude that credit score and income are independent of one another.

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Definitions:

Normal Curve

A type of continuous probability distribution for a real-valued random variable, characterized by its bell-shaped curve that is symmetrical around its mean.

Normal Curve

A bell-shaped curve that represents the distribution of a dataset where most of the observations cluster around the central peak and the probabilities for values further away from the mean taper off equally in both directions.

Binomial Probability

The probability of achieving a specific number of successes in a fixed number of independent trials, each with the same probability of success.

Binomial Distribution

A probability distribution that summarizes the likelihood that a value will take one of two independent states under a given number of observations.