Exam 2, Fall 2017 ECON 300 Name Stadent ID t life time. The bank 1. The Tuskegee

Question

Exam 2, Fall 2017 ECON 300 Name Stadent ID t life time. The bank 1. The Tuskegee Bank reports that10%or its creditcard holders will defaultl,thei mailed out 13 new cards today . What is the likelihood that at least two will defauld b. What is the likelihood that none of the candholders will default? The mean amount purchased by a typical customer at wal Grocery Store is$23.50, with a standard deviation of $5.00. Assume the distribution of amounts purchased follows the normal distribution. Fora sample of 50 customers, answer the following questions a. What is the likelihood the sample mean is at least $24.40 2· b. What is the likelihood the sample mean is greater than $24.40 but less than $25.50? c, within what limits will 98% of the sample means occur?

Explanation / Answer

1)Solving question 1

a)p( at least 2 default) = 1- [P(0 default)+P(1 default) ] =1-13C0 (0.9)^13 - 13C1 (0.1)^1 * 0.9^12 = 1-0.9^13- 1.3* 0.9^12 = 0.3786

b) P( No defaults) = 13C0 (0.9)^13 = 0.2541

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