5. A local bank reviewed its credit card policy with the intention of recalling some of its creditcards. It is known that 5% of cardholders will default, i.e., will miss three consecutive pay-ments. Management also knows that the chance of missing one monthly payment is 20% forcustomers who do not default. Of course, the probability of missing a monthly payment forthose who default is 1. Answer the following questions:(a)(b)What is the probability that a customer will default, if he missed one (or more)payments?What is the probability of a customer missing one (or more) monthly payment?Hint: Define first suitable events

Let M denote the event that a customer misses one (or more) monthly payments, and D denote the…

Answered: 5. A local bank reviewed its credit…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Suppose the probability of an IRs audit is 4.2 percent for U.S taxpayers who file form 1040 and who earned 100,000 or more. what are the odds that such taxpayer will be audited? what are the odds against such taxpayer being audited?
6.) Investment Club. The triple L investment club is considering purchasing a certain stock. After considerable research, the club members determine that there is a 60% chance of making $10,000, a 10% chance of breaking even, and a 30% chance of losing $7200. Determine the expectation of this purchase.
Suppose you are a broker (of junk bonds) who buys only bonds that have a 55% chance of not defaulting. You want to put together a portfolio of bonds with at least four that will not default. You want to be 93.9% sure that at least four will not default. How many bonds should you buy?
20.20 Life insurance. You might sell insurance to a 20-year-old friend. The probability that a man aged 20 will die in the next year is about 0.0007. You decide to charge $2000 for a policy that will pay $1 million if your friend dies. a. What is your expected profit on this policy? b. Although you expect to make a good profit, you would be foolish to sell a single policy only to your friend. Why? c. A life insurance company that sells thousands of policies, on the other hand, would do very well selling policies on exactly these same terms. Explain why
here is a 0.9988 probability that a randomly selected 28-year-old male lives through the year. A life insurance company charges $176 for insuring that the male will live through the year. If the male does not survive the year, the policy pays out $80,000 as a death benefit. Complete parts (a) through (c) below. a. From the perspective of the 28-year-old male, what are the monetary values corresponding to the two events of surviving the year and not surviving? b. If the 28-year-old male purchases the policy, what is his expected value? c. Can the insurance company expect to make a profit from many such policies? Why?
You have inherited a lottery ticket which might be a $10,000 winner. You have a 0.25 chance of winning the $10,000 and a 0.75 chance of winning $0. You have an opportunity to sell the lottery ticket for $2,500 - What is your expected return and what should you do if are risk averse?
4.
Brandybuck Insurance Company (BIC) is deciding whether to insure the lives of those leading a quest to Moria. Based on past experience, the probability of surviving such a quest is 91.8%. If BIC charges a premium of 8,449 silver coins and would pay a death benefit of 87,797 silver coins if the insured were to die, what is the expected value of this insurance policy to BIC? Round to the nearest silver coin as needed. If the expected value is a loss to BIC, enter your answer as a negative number.
1. An investor is considering a $25,000 investment in a start-up company. She estimates that she has probability 0.05 of a $15,000loss, probability 0.15 of a $20,000 loss, probability 0.35 of a$35,000 profit, and probability 0.45 of breaking even (a profit of $0). What is the expected value of the profit? Select one: A. $16,000 B. $0 C. $19,750 D. $8500 note:-please send me answer in typed form strictly prohibited hand written solution
a) Suppose that you have a job paying $50,000 per year. With a 15% probability, next year your wage will be reduced to $20,000 for the year. 1. What is your expected income next year? 11. Suppose that you could insure yourself against the risk of reduced consumption next year. What would the actuarially fair insurance premium be? b) It has been observed that the consumption expenditure of people drops when they begin their retirement life. This implies that their consumption is not smooth, and proves that they are not fully insured against leaving the workforce. Is this statement true? Explain. c) A water company owns water pipes that burst often due to poor maintenance. The company can invest GHS m in the maintenance of the pipes. More maintenance means less water loss through bursts, and less compensation payments to residents due to 1 flooding of their properties. Assume that the value of lost water is maintenance reduces the amount of loss. Assume that the value of damage to…
The First Mortgage Company has noted that 6% of its customers pay their mortgage payments after the due date. a. What is the probability that in a random sample of 150 customers 7 will be late on their payments? b. What is the probability that in a random sample of 150 customers at least 10 will be late on their payments?
this a statistics question!!!! I am lookin for the monetary value!!!! For box a is $100,000 box b is -$55,000 box c is 0 and box d is 0 p1 = 75%p2 = 25% questions are 1. what EMV ( expected monetary value) amount do you come up with ? And what is your EMV decision ? In other words, do you build, or not?

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