Question: The bad debt ratio for a financial institution is defined
The bad debt ratio for a financial institution is defined to be the dollar value of loans defaulted divided by the total dollar value of all loans made. Suppose a random sample of seven Ohio banks is selected and that the bad debt ratios (written as percentages) for these banks are 7 percent, 4 percent, 6 percent, 7 percent, 5 percent, 4 percent, and 9 percent. Assuming the bad debt ratios are approximately normally distributed, the MINITAB output of a 95 percent confidence interval for the mean bad debt ratio of all Ohio banks is given below. Using the sample mean and sample standard deviation on the MINITAB output, demonstrate the calculation of the 95 percent confidence interval, and calculate a 99 percent confidence interval for the population mean debt- to-equity ratio.
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