Exhibit 5-14.The foreclosure crisis has been particularly devastating in housing markets in much of the south and west United States,but even when analysis is restricted to relatively strong housing markets the numbers are staggering.For example,in 2011 an average of three residential properties were auctioned off each weekday in the city of Boston,up from an average of one per week in 2005. Refer to Exhibit 5-14.What is the probability that exactly 10 foreclosure auctions occurred during a randomly selected five-day week in 2011 in Boston?
A)0.0008
B)0.0486
C)0.1185
D)0.9514

Question

Quizplus · Accepted Answer

The problem can be modeled using a Poisson distribution with a mean (λ) of 15 foreclosures per week (3 per day times 5 days). The probability of exactly 10 events (foreclosures) is calculated using the Poisson probability formula.