Chris owes $17,000 to a bank. The debt grows with 8% annual interest that compounds every year. How
2 answers:
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Answer:
(a) The distribution of is a Binomial distribution.
(b) The sampling distribution of the sample mean will be approximately normal.
(c) The value of is 0.50.
Step-by-step explanation:
It is provided that random variables are independent and identically distributed Bernoulli random variables with <em>p</em> = 0.50.
The random sample selected is of size, <em>n</em> = 100.
(a)
Theorem:
Let be independent Bernoulli random variables, each with parameter <em>p</em>, then the sum of of thee random variables,
is a Binomial random variable with parameter <em>n</em> and <em>p</em>.
Thus, the distribution of is a Binomial distribution.
(b)
According to the Central Limit Theorem if we have an unknown population with mean <em>μ</em> and standard deviation <em>σ</em> and appropriately huge random samples (<em>n</em> > 30) are selected from the population with replacement, then the distribution of the sample mean will be approximately normally distributed.
The sample size is large, i.e. <em>n</em> = 100 > 30.
So, the sampling distribution of the sample mean will be approximately normal.
The mean of the distribution of sample mean is given by,
And the standard deviation of the distribution of sample mean is given by,
(c)
Compute the value of as follows:
*Use a <em>z</em>-table.
Thus, the value of is 0.50.