Question

There is a .02 probability that a customer's Visa charge will be rejected at a certain Target store because the transaction exceeds the customer's credit limit. What is the probability that the first such rejection occurs within the first 20 Visa transactions?
a. .1362
b. .4000
c. .3324
d. .4538

Answer 1

Answer:

c. 3324

Step-by-step explanation:

We need to use the formula of Geometric CDF with π =0.02

P(x≤20) = 1 - (1-0.02)^20

P(x≤20) = 1 - (0.98)^20

P(x≤20) = 1 - (0.98)^20

P(x≤20) = 1 - 0.6676

P(x≤20) = 0.3324

Therefore the probability that the first such ejection occurs within the first 20 Visa transactions is 0.3324