14 A mortgage holding company has found that 2 of its mortga

14. A mortgage holding company has found that 2% of its mortgage holders default on their mortgage and lose the property. Furthermore, 90% of those who default are late on at least two monthly payments over the life of their mortgage as compared to 45% of those who do not default. What is the joint probability that a mortgagee has one or less late monthly payments and does not default on the mortgage?

A)        0.143

            B)        0.267

            C)        0.345

            D)        0.539

            E)         0.623

Solution