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 as follows:

a. Using the and s on the MINITAB output, verify the calculation of the 95 percent confidence interval, and calculate a 99 percent confidence interval for the mean debt-to-equity ratio.
b. Banking officials claim the mean bad debt ratio for all banks in the Midwest region is 3.5 percent and that the mean bad debt ratio for Ohio banks is higher. Using the 95 percent confidence interval, can we be 95 percent confident that this claim is true? Using the 99 percent confidence interval, can we be 99 percent confident that this claim is true?

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Variable N D-Ratio 7 6.00000 1.82574 0.69007 4. 31147, 7.68853) Mean StDev SE Mean 95% CI