Question

Based on past​ experience, a bank believes that 11​% of the people who receive loans will not make payments on time. The bank has recently approved 300 loans.

What is the probability that over 14​% of these clients will not make timely​ payments?

Answer 1

Solution

Given that,

p = 0.11

1 - p = 1 - 0.11 = 0.89

n = 300

= p = 0.11

=  [p( 1 - p ) / n] = [(0.11 * 0.89) / 300 ] = 0.018

P( > 0.14) = 1 - P( < 0.14)

= 1 - P(( - ) / < (0.14 - 0.11) / 0.018)

= 1 - P(z < 1.67)

Using z table

= 1 - 0.9525

= 0.0475