Question

A particular bank has two loan modification programs for distressed borrowers: Home Affordable Modification Program (HAMP) modifications, where the federal government pays the bank $1,000 for each successful modification, and non-HAMP modifications, where the bank does not receive a bonus from the federal government. To qualify for a HAMP modification, borrowers must meet a set of financial suitability criteria. Define the null and alternative hypotheses to test whether borrowers who receive HAMP modifications default less than borrowers who receive non-HAMP modifications. Let p₁ and p₂ represent the proportion of borrowers who received HAMP modifications that did not re-default, and the proportion of borrowers who received non-HAMP modifications that did not re-default, respectively.

		H0: p1 – p2= 0, HA: p1 – p2? 0
		H0: p1 – p2 > 0, HA: p1 – p2 ? 0
		H0: p1 – p2? 0, HA: p1 – p2< 0
		H0: p1 – p2? 0, HA: p1 – p2> 0

Answer 1

answer:

here, the reason behind this is the hypothesis testing based on borrowers who receive HAMP(Home Affordable Modification Program) modifications less than borrowers who receive non-HAMP modification.

so the correct one is

H0:P1-P2 $\geq$ 0 and HA:P1-P2 0