American Property Bubble-SOF

The bursting of the American property bubble showed that a rapid rise in home prices and household debt,
built on a foundation of low interest rates and easy mortgages, could be a toxic combination. When the
boom ended, it left a legacy of failed banks, foreclosed homes, recession and government debt.
Given the situation, the Maritime Community Bank (MCB) wanted to evaluate its mortgage/loan policies,
and randomly selected 500 recent loan/mortgage applicants. In the table below, the data is classified
according to their credit rating–excellent (E), good (G), fair (F) or poor (P)–and their place of residence–
Metro region (M), Cape Breton (C), or Western NS (W).
Place of Credit Rating

Place of Credit Rating
Residence  E  G  F  P  Total
M  70  100  65  45  280
C  24  42  20  14  100
W  28  72  8  12  120
Total  122  214  93  71  500

1. a) What proportion of loan applicants from the Metro region has a “better-than-fair” credit rating? b) What proportion of loan applicants with a “better-than-fair” credit rating is from the Metro region? c) Are the events “better-than-fair” and “from the Metro region” mutually exclusive? Why? d) Are the events “better-than-fair” and “from the Metro region” independent?

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