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QUESTION 28 OBSERVED FREQUENCIES Homeownership Application type Rent Mortgage Own Individual 3496 3839 1170 Joint 362 950 183 STANDARDIZED RESIDUALS Homeownership Application type Rent Mortgage

QUESTION 28

OBSERVED FREQUENCIES Homeownership
Application type Rent Mortgage Own
Individual 3496 3839 1170
Joint 362 950 183
STANDARDIZED RESIDUALS Homeownership
Application type Rent Mortgage Own
Individual 3.749 -3.667 0.568
Joint -8.943 8.747 -1.355

A study of 10 000 loans examines the association between homeownership (rent, mortgage, or own) and application type (individual, or joint).

A test of independence is conducted using =0.05, where standardized residuals are considered significant if they are more extreme than +/-2.

The Excel sheet for this question shows the observed frequencies and the standardized residuals.

What do the standardized residuals tell us about the relationship between homeownership and application type?

Fill in the blanks for the sentences below, ONLY interpreting standardized residuals that are statistically significant. Remember that expected values refer to what is expected assuming that the null hypothesis is true.

A) Loan applicants who rent their home [ Select ] ["are less likely to apply as an individual than expected", "are more likely to apply as an individual than expected", "have a similar frequency of individual applications as expected"] and [ Select ] ["are less likely to apply jointly than expected", "are more likely to apply jointly than expected", "have a similar frequency of joint applications as expected"] .

B) Loan applicants who have a mortgage on their home [ Select ] ["are less likely to apply as an individual than expected", "are more likely to apply as an individual than expected", "have a similar frequency of individual applications as expected"] and [ Select ] ["are less likely to apply jointly than expected", "are more likely to apply jointly than expected", "have a similar frequency of joint applications as expected"] .

C) Loan applicants who own their home [ Select ] ["are less likely to apply as an individual than expected", "are more likely to apply as an individual than expected", "have a similar frequency of individual applications as expected"] and [ Select ] ["are less likely to apply jointly than expected", "are more likely to apply jointly than expected", "have a similar frequency of joint applications as expected"] .

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