Q1) Consumer watchdog organization wishes to see whether Bank N in northern part of a state has higher default rate than Bank S in southern part of that same state. Researchers for group sample proportion of defaults on loans at both banks.  Out of 100 loans for Bank N, they determine 30 have defaulted; out of 100 loans for Bank S, they find 20 have defaulted. Complete hypothesis test using a 5% level for risk with directional research hypothesis.

a) H0:

b) H1:

c) Critical Value: t =

d)Test Statistic (Show procedure.): t =

e) Decision on H0:

f) Conclusion on the problem:

2) Find out the probability that random variable having standard normal distribution is between .87 and 1.28? 

Q2) Assume the daily change in price of stock is normally distributed with mean = .20 and standard deviation = .30. What price change is associated with 25th percentile? What Z score is associated with 25th percentile?