Originally Posted by

**lizzi583** 1. Using this table:

Down Payment 5% 10% 20% 25%

# of Mortgages

with this down 1260 700 560 280

Payment

Probability of .05 .03 .02 .01

Default

?: A bank finds that the relationship between mortgage defaults and the size of the down payment is given by the above table. If a default occurs, what is the probability that it is on a mortgage with a 5% down payment? Use Bayes' Formula and a tree diagram Show work

(The thing is i have to answer these questions with a tree diagram and bayes' formula and i have show calculations. for example question 1. should show a tree diagram; the left part of the tree should have four branches (one for each of the four levels of down-payment). Each of these four branches should then sprout two branches- one for default and the other for no default. Each branch should be labeled with its probability.)