In the Excel file Credit Risk Data test the hypotheses that

In the Excel file Credit Risk Data, test the hypotheses that the number of months employed is the same for applicants with low credit risk as those with high credit risk evaluations. Use a level of significance of 0.01. Please work problem out in excel.

Solution

You can use excel for this. Since we are comparing two populations (low credit risk and high credit risk), use two sample t test. In excel file, click on Data->Data Analysis, select two sample t test. Select data ranges, enter alpha = 0.01 and click on OK.

Now compare two tailed p-value with 0.01.

If p-value > 0.01, fail to reject null hypothesis and conclude that number of months employed is same for applicants with low credit risk as those with high credit risk evaluations.

If p-value 0.01, reject null hypothesis and conclude that number of months employed is not same for applicants with low credit risk as those with high credit risk evaluations.