## Lesson 13: Manufactured Homes and Owner Financing

Review:

- Exam 2 Results
- Guest Speaker content is fair game for Exam 3

Presentation:

- Guest Speaker: Ben Vonderwahl

Author: Justin

- 40 mins ago
- f19-econ325
- Justin

Review:

- Exam 2 Results
- Guest Speaker content is fair game for Exam 3

Presentation:

- Guest Speaker: Ben Vonderwahl

- 1 day ago
- f19-busad265
- Justin

Review:

- Quiz 5 and Extra Credit
- Significance Testing
- Exam 2 on Wed Oct 23

Exam 2 Topics:

- Census
- Sampling
- Sampling Distributions
- Central Limit Theorem
- Estimation
- Confidence Intervals = Point estimate +/- Margin of error
- t-distribution for small samples
- Inference for Proportions

- Significance Testing
- Step 1. Set up Ho and Ha
- Step 2. Calculate Z statistic
- Step 3. Calculate p-value
- Step 4. Compare p-value to alpha (0.05) and decide to Reject Ho or Fail to Reject Ho

Activity:

- 3 days ago
- f19-econ325
- Justin

Exam 2 | |

Mean | 79.4 |

Median | 81.5 |

Standard Deviation | 11.3 |

Range | 45.0 |

Minimum | 50.0 |

Maximum | 95.0 |

Sum | 3016.5 |

Count | 38 |

- 6 days ago
- f19-busad265
- Justin

Review:

- Quiz 5 solutions
- Two-tail hypothesis testing
- Exam 2 on Wed, Oct 23

Presentation:

- Something different
- Problem types
- Estimation
- Large sample
- Small sample
- Proportion

- Significance Testing

- Estimation

- 1 week ago
- f19-econ325
- Justin

Review:

- Culprits, only consumers were punished
**Exam 2 on Thu, Oct 17**

Exam 2 Topics:

- 2008 Housing/Mortgage/Financial Crisis
- Monetary Policy
- Federal Reserve
- Alan Greenspan
- Ben Bernanke

- Securitization and Derivatives
- Mortgage backed securities (MBS)
- Collateralized Debt Obligations (CDOs)
- Credit Default Swaps

- Subprime Lending
- Low-income borrowers
- Predatory lending
- Loan origination fees/bonuses

- Deregulation
- Laissez-faire capitalism, Ayn Rand, Reaganomics
- 1999 Gramm-Leach-Bliley Act – repeals 1933 Glass-Steagall Act
- 2000 Commodity Futures Modernization Act – prevents regulation of most derivatives
- 2004 SEC proposes “voluntary regulation” and lower capital requirements

- Mortgage Meltdown
- Skyrocketing default rates
- Dropping property values
- Strategic default
- Neighborhood deterioration

- Crisis Culprits
- Banks’ Excessive Leverage
- Subprime Lenders
- Federal Reserve Low Interest Rates
- Rating Agencies
- Secondary Mortgage Market
- Fannie Mae
- Freddie Mac

- Fiscal Policy
- Tax policy
- Spending policy
- 2017 Tax Reform

- Crime but no punishment on Wall Street
- No one went to jail
- Limited effort by Dept of Justice to pursue cases
- Missed opportunity to impose discipline
- Who’s cheating now?

- Recession
- Yield Inversion
- Unemployment Rate
- Credit expansion
- Housing Supply/Demand

Debate:

- Will housing prices fall if we have a deep recession?
- Robert Shiller on the next recession
- Vulnerability of the housing market
- Housing Boom?

Assignment:

- Study for Exam 2

- 1 week ago
- f19-busad265
- Justin

Review:

- Quiz 5
- Significance Testing
- Exam 2 on Wed, Oct 23

Presentation:

- Hypothesis testing: 1-tail vs 2-tail
- 2-Tail Tests
- Example 6.15 (p. 383-384):
- Ho: μ = 168, Ha: μ ≠ 168, x-bar = 173.7, n=71, σ = 27, α = 0.05

- Use Your Knowledge 6.43 (p. 385-386):
- Ho: μ = 25, Ha: μ ≠ 25, x-bar = 27, n=25, σ = 5, α = 0.05

- Example 6.15 (p. 383-384):
- Compare >, < and ≠
- Z = -1.73
- What is the p-value for
- Ha: μ > μo [use 1 – P(Z)]
- Ha: μ < μo [use P(Z)]
- Ha: μ ≠ μo [multiply by 2]

Activity:

Determine whether it’s a 1-sided or 2-sided hypothesis test and solve. Report p-values and determine if you can reject or must fail to reject the null hypothesis.

- A test of the null hypothesis Ho: μ = μo yields test statistic z = 1.34.
- What is the P-value if the alternative is Ha: μ > μo
- What is the P-value if the alternative is Ha: μ < μo
- What is the P-value if the alternative is Ha: μ ≠ μo

- The college bookstore tells students the average textbook price is $52 with a standard deviation of $4.50. A group of students thinks the average price is higher. In order to test the bookstore’s claim, the students select a random sample of size 100 and find a sample mean price of $52.80. Perform a hypothesis test to determine if the price difference is significantly higher for α = 0.05.
- A certain chemical pollutant in the Arkansas River has been constant for several years with mean μ = 34 ppm (parts per million) and standard deviation σ = 8 ppm. A group of factory representatives whose companies discharge liquids into the river is now claiming they have lowered the average with improved filtration devices. A group of environmentalists will test to see if this is true. Assume their sample of size 50 gives a mean of 32.5 ppm. Perform a hypothesis test to determine if the pollution levels are significantly lower for α = 0.05.
- A manufacturing process produces ball bearings with diameters that have a normal distribution with mean, μ = 0.50 centimeters and known standard deviation, σ = .04 centimeters. Ball bearings with diameters that are too small or too large are problematic.
- Assume a random sample n=25 with a sample mean diameter = 0.51 cm. Perform a hypothesis test at α = 0.05.
- Assume a random sample n=25 with a sample mean diameter = 0.48 cm. Perform a hypothesis test at α = 0.05.

- 2 weeks ago
- f19-econ325
- Justin

Review:

- Recovery, Affordability, Fiscal Policy
**Exam 2 on Thu, Oct 17**

Presentation:

- The Untouchables (0-08:40)
- Mortgage Crisis Fraud
- Wall Street Banks selling MBS and CDO securities

- Subprime Loan Originators pushing ARMs and other non-traditional loans on low-income borrowers
- Countrywide Financial

- Rating Agencies issuing AAA ratings on low quality MBS and CDOs
- Moody’s
- Standard and Poor’s

- Fannie and Freddie
- Purchasing subprime loans in the secondary market
- Providing liquidity for ongoing subprime lending

- Why was no one punished?
- Obama Administration DoJ did not aggressively pursue
- Excessive greed everywhere but difficult to prove criminal fraud
- No consequences = incentive to repeat
- Too big to fail & Too rich to jail

- Signs of recession and credit bubble
- Yield Inversion
- Unemployment
- Credit Expansion

Assignment:

- Watch The Untouchables (Frontline video)

- 2 weeks ago
- f19-busad265
- Justin

Review:

- Estimation with Confidence Intervals
- Small Sample Estimation
- Inference for Proportions
- Quiz 4
**Exam 2 on Wed, Oct 23**

Presentation:

**Significance Testing**- aka Hypothesis Testing
- Purpose: to evaluate data for evidence of significant agreement or disagreement

**Significance testing is like paternity testing.**- When you check father-child DNA for a match you can prove one person is or is not the father.
- The same test does not prove another person is the father.
- You’re evaluating only one possibility at a time.

- Significance Testing video

**Step 1.**Setup the null hypothesis (Ho) and alternate hypothesis (Ha)**Step 2.**Calculate the appropriate test statistic**Step 3.**Find the P-value (probability of obtaining result by chance)**Step 4.**Interpret results, compare P-value to α = 0.05 ; if P-value < 0.05, “Reject Ho” else “Fail to Reject Ho”

**Example A**:**Do Math SAT scores improve significantly with coaching?**- National Math SAT scores are normally distributed with mean score = 505 and std. dev = 62
- Sampled 1,000 students who received coaching
- Sample mean score was 509
- Are these results significantly better than the national average?
**Step 1**: Setup the hypothesis test**μ = 505, σ = 62**

x̅ = 509, n = 1,000

Ho: μ = 505

Ha: μ > 505

**Step 2**: Calculate the appropriate test statistic**Z-test =****(x̅ – μ)/(σ/√n)**- (509 – 505)/(62/√1000) = 4/1.96 =
**2.04**

**Step 3**: Find P-value- P = 1 – P(Z<2.04) = 1 – 0.9793 =
**0.0207**

- P = 1 – P(Z<2.04) = 1 – 0.9793 =
**Step 4**: Interpret results- 0.0207 ≅ 2.07% probability of getting this result by chance
- 0.0207 < 0.05
**Reject Ho**- Coaching seems to improve scores significantly

Assignment:

**Problem 1.1.**More than 200,000 people worldwide take the GMAT examination each year as they apply for MBA programs. Their scores vary Normally with mean about**μ = 525**and standard deviation about**σ = 100**. One hundred students,**n = 100**, go through a rigorous training program designed to raise their GMAT scores. The students who go through the program have an average score of**x̅ = 541.4**. Is there evidence to suggest the training program significantly improves GMAT scores?**Problem 1.2.**A newly installed rooftop solar system has been producing energy for**n = 100**days. Average energy production is**41.8**kWh per day with a standard deviation of**13.9**kWh. The solar panel manufacturer claims the panels typically produce**40**kWh per day. Is the newly installed system producing significantly more energy than estimated by the manufacturer?

* Most example and activity problems presented above are derived from* Moore, D.S., McCabe, G.P., and Craig, B.A., 2009. Introduction to the Practice of Statistics, 6th Edition. New York: W.H. Freeman and Company. *

- 2 weeks ago
- f19-econ325
- Justin

Review:

- Eviction
- Affordable housing
**Exam 2 on Thu, Oct 17**

Presentation:

- Recovery
- Warren Buffett interview with Charlie Rose
- Start @ 05:30
- Economic Recovery [@ 05:45]
- Housing Recovery [@ 07:00]
- Fiscal Policy [@ 10:00]
- Inequality and the Buffett Rule [@14:00]
- End @ 19:30

- Warren Buffett interview with Charlie Rose
- Fiscal Policy

Activity:

- Group Discussion
- 2017 Tax Reform

- Impact on housing affordability
- Impact on real estate investors

- 2 weeks ago
- f19-busad265
- Justin

Review:

- Quiz 4
- t-distribution for small samples

Presentation:

- How to Estimate a Population Proportion
- Conduct a Simple Random Sample (SRS) of size
*n* - Record the count,
*x*, of some attribute attributed to a portion of the population (e.g., number of voters favoring a candidate) - Calculate the sample proportion,
*p-hat = x/n* - If
*n*is sufficiently large (≥30), we can assume*p-hat*is Normally distributed - Estimate of the population proportion mean,
*μ = p-hat* - Estimate of the population proportion std dev,
*σ = √(p*(1-p)/n)* - Estimate margin of error,
*m = z*σ*(use*z = 1.96 for 95% confidence)* - Estimate with 95% confidence interval is
*p-hat ± m* - Same procedure for a small sample size (<30) using the t distribution and substituting t* for z*

- Conduct a Simple Random Sample (SRS) of size
- Example 8.1 on p. 489 – Binge Drinking Survey
- n = 13,819
- x = 3,140
*p-hat*= 3140/13819 = 0.227- standard deviation =
*√(p-hat*(1-p-hat)/n)*= 0.00356 *p-hat ± z*√(p-hat*(1-p-hat)/n)*= 0.227 ± 1.96*(0.00356) =**0.227 ± 0.007**- {0.220,0.234}

Activity:

- A random sample of 2,454 12th-grade students were asked the following question: Taking all things together, how would you say things are these days – would you say you’re happy or not too happy? Of the responses, 2,098 students selected happy. Determine the sample proportion of students who responded they were happy and calculate a 95% confidence interval for the population proportion of 12th-grade students who are happy.
- A phone survey contacted 1,910 households in which a computer was owned and respondents were asked if they could access the Internet from their home. A total of 1,816 of the households responded yes. Calculate a 95% confidence interval to estimate the proportion of American households with internet access.
- Currently, mothers in North America are advised to put babies to sleep on their backs. This recommendation has reduced the number of cases of sudden infant death syndrome (SIDS). However, it is a likely cause of another problem, i.e., flat spots on babies’ heads. A study of 440 babies aged 7 – 12 weeks found that 46.6% had flat spots on their heads. Calculate a 95% confidence interval for the proportion of babies in this age group that have flat spots.