# Question: Negative equity also known as being underwater refers to a

Negative equity (also known as being “underwater”) refers to a scenario where the market value of a residence is worth less than the outstanding balance on the mortgage for that home. Suppose the Federal Housing Administration (FHA), which is the government agency charged with supporting the home financing market, would like to test the hypothesis that the proportion of home mortgages with negative equity in Florida is more than 10% higher than the national proportion. A random sample of 180 mortgages from Florida found that 67 were underwater. A random sample of 190 mortgages across the United States found that 42 were underwater.

a. Using α = 0.05, perform this hypothesis test for the FHA.

b. Construct a 95% confidence interval to estimate the difference in the proportion of underwater mortgages for these two populations. Interpret your result.

c. Determine the p value and interpret the results.

d. Verify your results using PHStat.

a. Using α = 0.05, perform this hypothesis test for the FHA.

b. Construct a 95% confidence interval to estimate the difference in the proportion of underwater mortgages for these two populations. Interpret your result.

c. Determine the p value and interpret the results.

d. Verify your results using PHStat.

**View Solution:**## Answer to relevant Questions

Retailers pay close attention to holiday sales during the Thanksgiving weekend each year. To monitor these sales, a random sample of shoppers was selected in 2012 and again in 2013. The amount of money each shopper spent in ...Suppose the Bureau of Labor Statistics would like to investigate if the average retirement age for a worker in Japan is higher than the average retirement age for a worker in the United States. A random sample of 30 retired ...Recently, Las Vegas has seen increased competition from Singapore and Macau (China) for customers in the casino resort industry. One measurement of success is the average length of stay by visitors. The following data show ...Using the data from Problem 11.19, determine which means are different using α = 0.05. In Problem Consider the following data collected for a two way ANOVA: a. Using α = 0.05, is there significant interaction between Factors A and B? b. Using α = 0.05, are the Factor A means different? c. Using α = 0.05, are the ...Post your question