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A financial institution who markets home equity loan

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I need your help in this question plz.

A financial institution who markets home equity loans is testing two creatives, two interest rates, and 6 lists. 

Specifically the creatives are:               A.  ?Now the best time for a home equity loan?

                                                            B.  ?Hurry get a home equity loan before rates go up?

The loan terms are:                              1.  6.75% APR with 3 points at closing

                                                            2.  7.25% APR with 1.5 points at closing

The Lists are                                        List I

                                                            List II

                                                            List III

                                                            List IV

                                                            List V

                                                            List VI

Total test quantity is 50,000

The preliminary design is shown below:

	A.  Now is the best time for a home equity loan	B.  Hurry get a home equity loan before rates go up
List	6.75% APR	7.25% APR	6.75% APR	7.25% APR
I	2083	2083	2083	2083
II	2083	2083	2083	2083
III	2083	2083	2083	2083
IV	2083	2083	2083	2083
V	2083	2083	2083	2083
VI	2083	2083	2083	2083

Answer the questions shown below

A.  What is the name of the test design shown above? (2 points)

B.  If the financial institution receives a response rate of 1.05% (.0105), for one of the cells provide an assessment of how precisely we can estimate a roll out  response at a 95% level of confidence. (create a confidence interval around a proportion) (5 points)

C.  Do you think that the financial institution will see interactions in the factors in this test?  Explain your reasoning completely.  (3 points)

5.  (Continued)

D.  If it is believed that there is no interaction between the creatives, the loan terms and the lists, propose an alternative test design.  Consider a main effects design.  Indicate in the matrix below which cells are retained and give the reallocated samples size.  (10 points)

	A.  Now is the best time for a home equity loan	B.  Hurry get a home equity loan before rates go up
List	6.75% APR	7.25% APR	6.75% APR	7.25% APR
I
II
III
IV
V
VI

 For your alternative test design, provide a comparison to the precision (by calculating a confidence interval around the proportion) for a cell receiving a response rate of 1.05% to the preliminary test design.  (5 points)

Compare the precision you calculated in part B to the precision calculated in part E.  Explain the difference and what it means for each test design. ( 5 points )

 

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Oct 14, 2020

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