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 p₁ and p₂ 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 appropriate p-value to verify the claim? A) 0.2915 B) 0.5570 C) 0.5832 D) 0.7084

Question

Quizplus · Accepted Answer

The p-value of 0.2915 is the appropriate value to verify the claim that the right-to-cure law increased the proportion of delinquent borrowers who avoid foreclosure. This p-value indicates the probability of observing the given difference in proportions (or one more extreme) under the null hypothesis that there is no difference in the proportions of delinquent borrowers avoiding foreclosure before and after the law's enactment. A p-value of 0.2915 suggests that the observed difference could reasonably occur by chance, and thus does not provide strong evidence against the null hypothesis.

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