In August 2010,Massachusetts Enacted a 150-Day Right-To-Cure Period That Mandates

question 82

Multiple Choice

In August 2010,Massachusetts enacted a 150-day right-to-cure period that mandates that lenders give homeowners who fall behind on their mortgage an extra five months to become current before beginning foreclosure proceedings.Policymakers claimed that the policy would result in a higher proportion of delinquent borrowers becoming current on their mortgages.To test this claim,researchers took a sample of 244 homeowners in danger of foreclosure in the time period surrounding the enactment of this law.Of the 100 who fell behind just before the law was enacted,30 were able to avoid foreclosure,and of 144 who fell behind just after the law was enacted,48 were able to avoid foreclosure.Let p₁andp₂ represent the proportion of delinquent borrowers who avoid foreclosure just before and just after the right-to-cure law is enacted,respectively.Which of the following is the correct competing hypotheses that will test the policymakers' claim?

• 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:

Operating Line

A revolving credit facility extended by a bank to a business to fund its day-to-day operations.

Notes Payable

Debt instruments or formal written agreements to pay a specified sum of money at a future date.

Financial Statements

Formal records of the financial activities and position of a business, individual, or other entity.

Prepaid Property Tax

An expense paid in advance for property taxes, recognized as an asset until the period the tax covers.