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.What is the probability that no more than two foreclosure auctions occurred on a randomly selected weekday of 2011 in Boston?
A) 0.1991
B) 0.2240
C) 0.4232
D) 0.5768

Question

Quizplus · Accepted Answer

The problem can be modeled using a Poisson distribution with an average rate (λ) of 3 auctions per weekday. The probability of having no more than two auctions is the sum of the probabilities of having 0, 1, or 2 auctions, which is calculated using the Poisson probability formula.

The Foreclosure Crisis Has Been Particularly Devastating in Housing Markets