A commercial bank wants to lower the fluctuations in its dep

A commercial bank wants to lower the fluctuations in its deposit holdings and announces a minimum amount required to be held in its checking accounts. The standard deviation in 16 of its accounts before the minimum limit was $2500 and after the change it is $2025. has the change in policy decreased the variance of account holdings? Is 2a less than 2b where \"a\" is the after and \"b\" is the before?

Solution

Given n1=n2=16; s1=$2500; s2=$2025;

Null hypothesis: There is no change in the variance before and after minimum limit condition.

Alternative hypothesis: The variance has decreased after impose the minimum limit condition or the variance is more after impose the minimum limit condition

Since the P-value is high we accept the null hypothesis and conclude that there is no difference in variation of account holdings after imposing minimum amount requirement condition.