00:01
It's given in this exercise that 7 % of a certain bank's credit card holders will default at some time in their life.
00:08
So that means for a randomly selected credit card holder from this bank, the probability of default at some point in their life is 0 .07.
00:17
And now we have a sample of 12 credit cards for customers of this bank.
00:23
For part a, we are asked how many of these new cardholders would we expect to default.
00:29
So first let's define a random variable, which is the number of...
00:33
Of cardholders that default at some point in their life.
00:45
So here, each of the cardholders, each of the 12, can be considered a bernoulli trial.
00:51
For each person, there is two possible outcomes.
00:53
Either they default or they do not.
00:56
And we can consider these people all to be independent from each other.
01:01
There's no reason to think that the outcome for one has any bearing on the outcome for the other 11.
01:07
The number of successes in a given number of independent brunuli trials is a binomial random.
01:13
Variable.
01:14
So here we can say x is a binomial...