Question

In early 2013 Realty Trac reported that foreclosures had settled down to 1 in 859 homes per month for a rate of 0.116%, far below the 1.6% seen during the financial crisis of 2007-2008. Suppose a large bank holds 9455 of these mortgages.
a) Can you use the Normal model to describe the sampling distribution model for the sample proportion of foreclosures? Check the conditions and discuss any assumptions you need to make.
b) Sketch and clearly label the sampling model, based on the 68-95-99.7 Rule.
c) How many of these homeowners might the bank expect will default on their mortgages? Explain.


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  • CreatedMay 14, 2015
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