A Particular Bank Has Two Loan Modification Programs for Distressed

Multiple Choice

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.

A) H₀: p₁- p₂ ≤ 0,H_A: p₁- p₂ > 0
B) H₀: p₁- p₂ ≥ 0,H_A: p₁- p₂ < 0
C) H₀: p₁- p₂ = 0,H_A: p₁- p₂ ≠ 0
D) H0: p1- p2 > 0,H_A: p1- p2 ≤ 0