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:

Pituitary Gland

A small, pea-sized gland located at the base of the brain that produces hormones influencing growth, metabolism, and the functioning of other endocrine glands.

Endocrine System

A bodily system comprising of glands that release hormones directly into the bloodstream to regulate body functions and maintain homeostasis.

Hormones

Chemical messengers produced by glands in the body, which travel through the bloodstream to tissues or organs to regulate bodily functions.

Bloodstream

The flowing blood within the circulatory system of the body, responsible for transporting oxygen, nutrients, waste, and other substances.