Question

Based on past experience, a bank believes that 6% of the people who receive loans will not make payments on time. The bank has recently approved 300 loans. What is the probability that over 8% of these clients will not make timely payments

Answer 1

Answer:

0.11685

Step-by-step explanation:

Given that :

Mean, p= 6% = 0.06

x = 8%,, x = 0.08

Probability that over 8% will not make timely payment :

Standard deviation (σ) = sqrt[(pq) /n]

q = 1 - p = 1 - 0.06 = 0.94

σ = sqrt[(0.06*0.94)/200)] = sqrt(0.000282) = 0.0167928

Obtain the Z score :

P(x > 0.08) = (0.08 - 0.06) / 0.0167928

P(x > 0.08) = 0.02 / 0.0167928

P(x > 0.08) = 1.1909826

P(Z > 1.1909) = 0.11685 (Z probability calculator)