Question

In early 2007 the Mortgage Lenders Association reported that homeowners, hit hard by rising interest rates on adjustable-rate mortgages, were defaulting in record numbers. The foreclosure rate of 1.6% meant that millions of families were losing their homes. Suppose a large bank holds 1731 adjustable-rate mortgages.
a) Can you apply the Central Limit Theorem 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.

Answer 1

Answer:

c

Step-by-step explanation: