EXAMPLE 1.18 The Distribution of T-Bill Interest Rates

CASE 1.1 Let’s look again at the histogram in Figure 1.6 (page 13) and the TBILL data file. The distribution has a single peak at around 5%. The distribution is somewhat right-skewed—that is, the right tail extends farther from the peak than does the left tail.

There are some relatively large interest rates. The largest is 15.76%. What do we think about this value? Is it so extreme relative to the other values that we would call it an outlier? To qualify for this status, an observation should stand apart from the other observations either alone or with very few other cases. A careful examination of the data indicates that this 15.76% does not qualify for outlier status. There are interest rates of 15.72%, 15.68%, and 15.58%. In fact, there are 15 auctions with interest rates of 15% or higher.