The Credit Risk Department of a major bank estimates the default rate on loans under $10,000 to be 5%. The bank will make 1900 loans that are under $10,000 next month. Answer the following. (If necessary, consult a list of formulas.) (a) Find the mean of p, where p is the proportion of defaults on the 1900 loans under $10,000 to be made next month. (b) Find the standard deviation of p. (c) Compute an approximation for P(p 2 0.04), which is the probability that 4% or more of next month's loans under $10,000 will be defaulted on. Round your answer to four decimal places.
The Credit Risk Department of a major bank estimates the default rate on loans under $10,000 to be 5%. The bank will make 1900 loans that are under $10,000 next month. Answer the following. (If necessary, consult a list of formulas.) (a) Find the mean of p, where p is the proportion of defaults on the 1900 loans under $10,000 to be made next month. (b) Find the standard deviation of p. (c) Compute an approximation for P(p 2 0.04), which is the probability that 4% or more of next month's loans under $10,000 will be defaulted on. Round your answer to four decimal places.
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
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Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Transcribed Image Text:The Credit Risk Department of a major bank estimates the default rate on loans under $10,000 to be 5%. The bank will make 1900 loans that are under
$10,000 next month.
Answer the following. (If necessary, consult a list of formulas.)
(a) Find the mean of p, where p is the proportion of defaults on the 1900 loans under $10,000 to be made next month.
(b) Find the standard deviation of p.
(c) Compute an approximation for P(p >0.04), which is the probability that 4% or more of next month's loans under
$10,000 will be defaulted on. Round your answer to four decimal places.
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