A bank is testing a new method for getting delinquent customers to pay their past-due credit card bills. The standard way was to send a letter (costing about $0.45) asking the customer to pay. That worked 30% of the time. The bank wants to test a new method that involves sending a DVD to customers encouraging them to contact the bank and setup a payment plan. Developing and sending the video costs about $10 per customer.
20.
What is the parameter of interest?
A) past-due credit card bills
B) proportion of customers who are delinquent in paying their credit card bill
C) proportion of customers who pay their credit card bill on time
D) proportion of delinquent customers who pay their credit card bill
Would this be B? I thought C, but got the answer wrong.
The parameter of interest refers to the specific characteristic or value that you want to estimate or make inferences about for the population based on the sample data. In this case, the bank is interested in testing a new method to improve the payment rates for delinquent customers.
Option B) "proportion of customers who are delinquent in paying their credit card bill" is the correct parameter of interest in this scenario. The bank wants to estimate the proportion of all customers who are delinquent in paying their credit card bill and determine if the new method is more effective in improving the payment rates compared to the standard method.
Option C) "proportion of customers who pay their credit card bill on time" is not the parameter of interest because it does not specifically focus on the delinquent customers that the bank is trying to target with the new method.
So, in this case, the correct answer is B) proportion of customers who are delinquent in paying their credit card bill.