Question

Axel reads that 7.2% of borrowers are more than 90 days late on their car
loan payments. He wants to compare this statistic to his bank's data. Axel
creates this graph of the late payment status for all car loans at his bank.
Which of the following statements BEST describes Axel's findings?
Delinquency Rate of Car Loans
A) Axel's findings are relevant but insignificant.
B) Axel's findings are relevant and significant.
C) Axel's findings are irrelevant but significant.
D) Axel's findings are irrelevant and insignificant.
30 days late
9.1%
90+ days late
5.6%
60 days late
4.3%
On time
81%

Answer 1

A) Axel's findings are relevant but insignificant.

Reason: His bank's 90+ days late rate (5.6%) measures the same quantity as the 7.2% figure, so the comparison is relevant. However, without information on sample size or variability (or a significance test/confidence interval) you cannot tell whether the 1.6 percentage-point difference is statistically (or practically) significant.