The following chart shows the (approximate) total number of subprime home mortga

Question

The following chart shows the (approximate) total number of subprime home mortgages in a state in November 2008, broken down into four categories.

(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 the state during November 2008 was neither in foreclosure nor repossessed. HINT [See Example 1.] (Round your answer to two decimal places.)

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(b)

What is the probability that a randomly selected subprime mortgage in the state during November 2008 was not current? (Round your answer to two decimal places.)

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Mortgage
Status Current Past
Due In
Foreclosure Repossessed Total Number 126,330 55,310 8,950 5,690 196,280

Explanation / Answer

a)P( randomly selected subprime mortgage in the state during November 2008 was neither in foreclosure nor repossessed)=P(it is current or past due)=(126330+55310)/196280=0.93

b)

P(randomly selected subprime mortgage in the state during November 2008 was not current)

=1-P(randomly selected subprime mortgage in the state during November 2008 wascurrent

=1-126330/196280=0.36

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