A Particular Bank Has Two Loan Modification Programs for Distressed

question 14

Multiple Choice

A particular bank has two loan modification programs for distressed borrowers: Home Affordable Modification Program (HAMP) modifications,where the federal government pays the bank $1,000 for each successful modification,and non-HAMP modifications,where the bank does not receive a bonus from the federal government.To qualify for a HAMP modification,borrowers must meet a set of financial suitability criteria.Define the null and alternative hypotheses to test whether borrowers who receive HAMP modifications default less than borrowers who receive non-HAMP modifications.Let p₁ and p₂ represent the proportion of borrowers who received HAMP modifications that did not re-default,and the proportion of borrowers who received non-HAMP modifications that did not re-default,respectively.

• A) H₀: p₁- p₂ ≤ 0,H_A: p₁- p₂ > 0
• B) H₀: p₁- p₂ ≥ 0,H_A: p₁- p₂ < 0
• C) H₀: p₁- p₂ = 0,H_A: p₁- p₂ ≠ 0
• D) H0: p1- p2 > 0,H_A: p1- p2 ≤ 0

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Definitions:

Labor Supply

The total hours that workers are willing and able to work at a given wage rate.

Gross Demand

The total quantity of a good or service demanded across all market segments before considering supply constraints or competition.

Endowment

The initial allocation of goods, services, or wealth that an individual or entity possesses before entering any trade or transaction.

Budget Line

A graphical representation showing the combination of two goods that a consumer can afford given their income and the prices of the goods.