The Bank of Hawaii reports that $7 \%$ of its credit card holders will default at some time in their life. The Hilo branch just mailed out 12 new cards today. a. How many of these new cardholders would you expect to default? What is the standard deviation? b. What is the likelihood that none of the cardholders will default? c. What is the likelihood at least one will default?
Added by Cassidy C.
Step 1
We can use the binomial distribution to answer this question. Let X be the number of cardholders who will default. Then, X follows a binomial distribution with n = 12 and p = 0.07 (the probability of defaulting). The expected value of X is E(X) = np = 12 x 0.07 = Show more…
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The Bank of Hawaii reports that 7 percent of its credit card holders will default at some time in their life. The Hilo branch just mailed out 12 new cards today. a. How many of these new cardholders would you expect to default? What is the standard deviation? b. What is the likelihood that none of the cardholders will default? c. What is the likelihood at least one will default?
The Bank of Hawaii reports that 7% of its credit card holders will default at some time in their life. The Hilo branch just mailed out 12 new cards today. How many of these new cardholders would you expect to default? What is the standard deviation? What is the likelihood that none of the cardholders will default? What is the likelihood that at least one will default?
Robin C.
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