Question

Negative equity is defined as a situation where the mortgage on a property is more than the market value of the property. During the recent financial crisis, market values of most homes declined resulting in an increase in the proportion of homes with negative equity. This, in turn, led to an increase in home foreclosures. According to Core Logic, 52.4% of home mortgages in Nevada during the fourth quarter of 2012 had negative equity. A random sample of 210 home mortgages was randomly selected.
a. What is the probability that 50% or less of this sample has negative equity?
b. What is the probability that 57% or more of this sample has negative equity?
c. What is the probability that between 49% and 55% of this sample has negative equity?
d. Suppose that 130 home mortgages from this sample have negative equity? Does this result support the claim made by CoreLogic?


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  • CreatedJuly 17, 2015
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