Pr(deny=1 l P/I ratio, black) = -2.26+2.74 P/ I ratio + 0.71 black

(0.16) (0.44) (0.083)

a. A black mortgage applicant has a P/ I ratio of 0.35. what is the probability that his application will be denied?

b. Suppose that the applicant reduced this ratio to 0.30. what effect would this have on his probability of being denied a mortgage?

c. Repeat a and b for a white applicant

d. Does the marginal effect to the P/I ratio on the probability of mortgage denial depend on race? Explain.