Consider the following portion of data that includes information about home loan applications. Variables on each application include 

(1) Whether the application is conventional or subsidized by the federal housing administration (LoanType)

(2) Whether the property is a single-family or multi-family home (PropertyType) 

(3) Whether the application is for a first-time purchase or refinancing (Purpose). Application LoanType PropertyType Purpose

a. Using the first five applications, compute the matching coefficients for all pairwise observations based on LoanType, PropertyType, and Purpose.

b. Identify and describe the loan applications that are most and least similar to each other. Explain the characteristics of these loan applications.

Transcribed Image Text:

Application 1 2 ⠀ 103 LoanType Conventional Conventional 1 Federal Housing Property Type Single-family Multi-family Refinancing E # Single-family Purchase Purpose Purchase