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The mortgage foreclosure crisis that preceded the Great Recession impacted the U.S. economy in many ways,...

The mortgage foreclosure crisis that preceded the Great Recession impacted the U.S. economy in many ways, but it also impacted the foreclosure process itself as community activists better learned how to delay foreclosure, and lenders became more wary of filing faulty documentation. Suppose the duration of the eight most recent foreclosures filed in the city of Boston (from the beginning of foreclosure proceedings to the filing of the foreclosure deed, transferring the property) has been 230 days, 420 days, 340 days, 367 days, 295 days, 314 days, 385 days, and 311 days. Assume the duration is normally distributed.

Refer to Exhibit 8-2. Construct a 90% confidence interval for the mean duration of the foreclosure process in Boston.

[259.7400, 405.7600]

[293.2137, 372.2863]

[298.4296, 367.0704]

[303.2282, 362.2718]

Solutions

Expert Solution

sample std dev ,    s = √(Σ(X- x̅ )²/(n-1) ) =   59.0103
Sample Size ,   n =    8
Sample Mean,    x̅ = ΣX/n =    332.7500

Level of Significance ,    α =    0.1          
degree of freedom=   DF=n-1=   7          
't value='   tα/2=   1.8946   [Excel formula =t.inv(α/2,df) ]      
                  
Standard Error , SE = s/√n =   59.010   / √   8   =   20.8633
margin of error , E=t*SE =   1.8946   *   20.863   =   39.527
                  
confidence interval is                   
Interval Lower Limit = x̅ - E =    332.75   -   39.527   =   293.2137
Interval Upper Limit = x̅ + E =    332.75   -   39.527   =   372.2863

answer: [293.2137, 372.2863]

milcah answered 8 months ago
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