A First Course in Probability (10th Edition)
10th Edition
ISBN: 9780134753119
Author: Sheldon Ross
Publisher: PEARSON
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Transcribed Image Text:The equation below estimates the effect of race on the probability of mortgage denial, holding constant the payment-to-income ratio.
Pr(deny = 1|P/I ratio, black) = 0(-2.21 + 2.73P/I ratio + 0,75black)
%3!
(0.16) (0.45)
(0.085)
A black mortgage applicant has a PA ratio of 0.39. What is the predicted probability that his application will be denied?
The predicted probability that his application will be denied is 34.64 %.
(Express your response as a percentage and round to two decimal places)
o Suppose that the applicant reduced this ratio to 0.31. What effect would this have on his predicted probability of being denied a mortgage?
The predicted probability of being denied a mortgage would decrease by 7.67 percentage points.
(Round your response to two decimal places)
ck
A white mortgage applicant has a P/I ratio of 0.36. What is the predicted probability that his application will be denied?
on
The predicted probability that his application wil be denied is%.
ory
(Express your response as a percentage and round to two decimal places)
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