Subprime Mortgages during the 2000–2008 Housing Bubble (Compare Exercise 27 in Section 7.2.) The following chart shows the (approximate) total number of subprime home mortgages in Texas in November 2008, broken down into four categories: 31 Mortgage Status Current Past Due In Foreclosure Repossessed Total Number 136,330 53,310 8,750 5,090 203,480 (The four categories are mutually exclusive; for instance, “Past Due” refers to a mortgage whose payment status is past due but is not in foreclosure, and “In Foreclosure” refers to a mortgage that is in the process of being foreclosed but not yet repossessed.) a. Find the probability that a randomly selected subprime mortgage in Texas during November 2008 was neither in foreclosure nor repossessed. [ HinT: See Example 1.] b. What is the probability that a randomly selected subprime mortgage in Texas during November 2008 was not current?
Subprime Mortgages during the 2000–2008 Housing Bubble (Compare Exercise 27 in Section 7.2.) The following chart shows the (approximate) total number of subprime home mortgages in Texas in November 2008, broken down into four categories: 31 Mortgage Status Current Past Due In Foreclosure Repossessed Total Number 136,330 53,310 8,750 5,090 203,480 (The four categories are mutually exclusive; for instance, “Past Due” refers to a mortgage whose payment status is past due but is not in foreclosure, and “In Foreclosure” refers to a mortgage that is in the process of being foreclosed but not yet repossessed.) a. Find the probability that a randomly selected subprime mortgage in Texas during November 2008 was neither in foreclosure nor repossessed. [ HinT: See Example 1.] b. What is the probability that a randomly selected subprime mortgage in Texas during November 2008 was not current?
Solution Summary: The author calculates the probability that a randomly subprime mortgage in Texas during 2008 was neither in foreclosure nor repossessed.
Subprime Mortgages during the 2000–2008 Housing Bubble (Compare Exercise 27 in Section 7.2.) The following chart shows the (approximate) total number of subprime home mortgages in Texas in November 2008, broken down into four categories:31
Mortgage Status
Current
Past Due
In Foreclosure
Repossessed
Total
Number
136,330
53,310
8,750
5,090
203,480
(The four categories are mutually exclusive; for instance, “Past Due” refers to a mortgage whose payment status is past due but is not in foreclosure, and “In Foreclosure” refers to a mortgage that is in the process of being foreclosed but not yet repossessed.)
a. Find the probability that a randomly selected subprime mortgage in Texas during November 2008 was neither in foreclosure nor repossessed. [HinT: See Example 1.]
b. What is the probability that a randomly selected subprime mortgage in Texas during November 2008 was not current?
Consider the proof below:
Proposition: If m is an even integer, then 5m +4
is an even integer.
Proof: We see that
|5m+4=10n+4
=
2(5n+2). Therefore,
5m+4 is an even integer.
**Note: you may assume the proof is valid, just poorly written.
Based upon the Section 1.3 screencast and the reading assignment, select all
writing guidelines that are missing in the proof.
Proof begins by stating assumptions
✓ Proof has an invitational tone/uses collective pronouns
Proof is written in complete sentences
Each step is justified
☐ Proof has a clear conclusion
Note: The purpose of this problem below is to use computational techniques (Excelspreadsheet, Matlab, R, Python, etc.) and code the dynamic programming ideas seen inclass. Please provide the numerical answer to the questions as well as a sample of yourwork (spreadsheet, code file, etc.).We consider an N-period binomial model with the following properties: N = 60, thecurrent stock price is S0 = 1000; on each period, the stock price increases by 0.5% whenit moves up and decreases by 0.3% when it moves down. The annual interest rate on themoney market is 5%. (Notice that this model is a CRR model, which means that thebinomial tree is recombining.)(a) Find the price at time t0 = 0 of a (European) call option with strike price K = 1040and maturity T = 1 year.(b) Find the price at time t0 = 0 of a (European) put option with strike price K = 1040and maturity T = 1 year.(c) We consider now, that you are at time t5 (i.e. after 5 periods, which represents 1month later). Assume that the stock…
4. [-/1 Points]
DETAILS
MY NOTES
SESSCALCET2 6.5.024.
Find the approximations Tη, Mn, and S, to the integral
computer algebra system.)
ASK YOUR TEACHER
PRACTICE ANOTHER
4 39
√
dx for n = 6 and 12. Then compute the corresponding errors ET, EM, and Es. (Round your answers to six decimal places. You may wish to use the sum command on a
n
Tn
Mn
Sp
6
12
n
ET
EM
Es
6
12
What observations can you make? In particular, what happens to the errors when n is doubled?
As n is doubled, ET and EM are decreased by a factor of about
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and Es is decreased by a factor of about
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