About 74 of freddie mac-owned loans were refinanced in the, Ask an Expert

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About 74% of Freddie Mac-owned loans were refinanced in the second quarter of 2005 (USA Today, Lifeline, August3, 2005), resulting in new mortgages carrying loan amounts at least 5% above the original mortgage balance. The median loans refinanced in the second quarter was 2.6 years old. If a sample of 2500 was used to obtain this information,

A. Determine if the sample for the test is large enough to warrant appropriating the sample proportions distribution with a normal distribution.

B. Use this information to determine if less than 75% of new mortgage had a loan amount at least 5% above the original mortgage balance. Useable test statistic approach with a=0.025.

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