In December, 2013, Lender Processing Services* reported that although mortgage defaults had fallen, in New York state, 12.4% of mortgages were still "noncurrent," meaning that payments had been missed. Suppose a New York bank holds 1731 mortgages.
a) Can you apply the Central Limit Theorem to describe the sampling distribution model for the sample proportion of noncurrent mortgages? Check the conditions and discuss any assumptions you need to make.
b) Sketch and clearly label the sampling model, based on the 68-95-99.7 Rule.
c) How many of these homeowners might the bank expect will default on their mortgages? Explain.