1 In an article from September 13 2010 titled Student Loan D

1) In an article from September 13, 2010 titled “Student Loan Default Rates Increase,” the website ed.gov analyzes trends in default rates for student loans over time. For the year 2008 the default rate for graduates was 7%.

a) If we randomly sample 100 students from this population, would it be unusual to see a sample with an 11% default rate?

A. No, this would not be unusual because the default rate is increasing over time.
B. Yes, this would be unusual because 11% is an increase of more than 50% from 7%.
C. Yes, this would be unusual because 11% is more than two standard deviations from 7%.
D. No, this would not be unusual because the error is only 4% which is less than 2 standard deviations.

b) If we randomly sample 500 students from this population, would it be unusual to see a sample with an 11% default rate?

A. No, this would not be unusual because the default rate is increasing over time.
B. Yes, this would be unusual because 11% is more than two standard deviations from 7%.
C. Yes, this would be unusual because 11% is an increase of more than 50% from 7%.
D. No, this would not be unusual because the error is only 4% which is less than 2 standard deviations.

Solution

First set up null and alternate for the two samples.

Hence Option d for both.