In early 2012, the proportion of mortgages that were “under water”—a negative equity position in which the homeowner owes more than the value of the home—was highest in Nevada and Arizona ( Lenders are also interested in homes at risk—those within 5% of being in a negative equity position. A sample of mortgages from these two states suggest that the problem may be less severe in Nevada. The sample found that 62 of 1369 Arizona mortgages were in a “near negative equity” state. A sample of 604 Nevada mortgages found 22 in a near negative equity state.
a) Is there evidence that the percentage of near negative equity mortgages is different in the two states?
b) Give a 90% confidence interval for the difference in proportions.

  • CreatedMay 15, 2015
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