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The best-known credit rating in one country is the FICO score. The score ranges from 300 to 850, with higher scores indicating that the
The best-known credit rating in one country is the FICO score. The score ranges from 300 to 850, with higher scores indicating that the consumer is a better credit risk. For the accompanying table, consumers with scores below 620 are labeled Risky. Those having scores between 620 and 660 are labeled Uncertain. Those between 660 and 720 have an Acceptable credit rating, and consumers with scores over 720 have Perfect credit. A department store kept track of loans (in the form of a store credit card) given to customers with various ratings. The accompanying table shows the proportion of customers within each risk category that did not repay the loan (defaulted). Complete parts (a) through (d) below. i Click the icon to view the table. A. No, because the percentages are approximately the same among the columns. B. No, because the percentages differ among the columns. C. Yes, because the percentages are approximately the same among the columns. D. Yes, because the percentages differ among the rows. E. Yes, because the percentages differ among the columns. F. No, because the percentages are approximately the same among the rows. (b) What would it mean for the use of the FICO score as a tool for stores to rate consumers if there were no association bety If there were no association, the percentages that defaulted and repaid would be the same between the four score ranges customers. Table of proportions for defaulting Score Range Defaulted Repaid Risky 24% 76% Uncertain 24% 76% Acceptable Perfect 4% 96% 2% 98% Print Done (c) If virtually all customers at this store have acceptable or perfect credit scores, will the association be strong or weak? Suppose that the store has 10,000 loans, with 50 made to risky customers, 100 to uncertain customers, 9,000 to acceptable customers, and the rest to perfect customers. In this case, the chi-squared statistic will be x (Round to two decimal places as needed.)
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