Question

Fund-U, a mortgage company, knows that the chance that any given customer will default on a loan (that is not pay it back) is
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Answer:

let x: The number of customer

\therefore x takes values 0,1,2,3,4,5

p: The probability that sampe will default

p=0.04 ( p+q=1 )

q=0.96

By using binomial pmf

5 p(.r = 2) = ) (0.04) 2 * (0.96)

plx = 2) = 0.014

Add a comment
Know the answer?
Add Answer to:
Fund-U, a mortgage company, knows that the chance that any given customer will default on a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Question 13 1 pts Four percent of the customers of a mortgage company default on their...

    Question 13 1 pts Four percent of the customers of a mortgage company default on their payments. A sample of four customers is selected. What is the probability that exactly two customers in the sample will default on their payments? 0 0.0142 0 0.0088 0 0.2572 0 0.7458

  • 2. 7% of the customers of a mortgage company default on their payments. A sample of...

    2. 7% of the customers of a mortgage company default on their payments. A sample of six customers is selected. What is the probability that exactly two customers in the sample will default on their payments? (NOTE: Round your FINAL answer to the nearest 4 decimal points. For example, 0.0223 or 0.2579) 5. An airline has determined that 12% of its international flights are not on time. Use the normal approximation to the binomial distribution to answer the following questions....

  • A health insurance company knows that there are two types of customers (smokers and non-smokers), each...

    A health insurance company knows that there are two types of customers (smokers and non-smokers), each facing different health risks. The probabilities of getting sick and the healthcare costs in the case of illness for the two customer types is given in the table below. Group Healthcare costs Probability of getting sick Smokers $1200 50% Non-smokers $1200 20% Assume that each customer has a monthly income of $1600 and has a utility function given by U(x)=sqrt(x), where x is the...

  • 1. Sponsors of a local charity decided to attract wealthy patrons to its $500-a-plate dinner by...

    1. Sponsors of a local charity decided to attract wealthy patrons to its $500-a-plate dinner by allowing each patron to buy a set of 20 tickets for the gaming tables. The chance of winning a prize for each of the 20 plays is 50–50. If you bought 20 tickets, what is the chance of winning 15 or more prizes? Multiple Choice 0.006 0.250 0.750 0.021 3. An insurance agent has appointments with four prospective clients tomorrow. From past experience the...

  • Please do all questions... Six hundred registered voters were surveyed and asked their political affiliation and...

    Please do all questions... Six hundred registered voters were surveyed and asked their political affiliation and whether they support the idea of the Federal Government investing a portion of their social security contributions in the stock market. A summary of the survey is given in the table. If a voter is selected at random, what is the probability that the voter is a republican? Political Affiliation Republican Response Democrat Independent Totals Yes 35 90 10 135 No 165 100 200...

  • Have to show work for every problem 4. A company uses three plants to produce a...

    Have to show work for every problem 4. A company uses three plants to produce a new computer chip. Plant A produces 30% of the chips. Plant B produces 45% of the chips. The rest of the chips are produced by plant C. Each plant has its own defectiv rate. These are: plant A produces 3% defective chips, plant B produces 1% defective chips, plant C produces 5% defective chips. Hint: draw a tree diagram. (a) Construct a tree diagram...

  • 1. The access code for a car's security system consists of four digits. be zero and...

    1. The access code for a car's security system consists of four digits. be zero and the last digit must be even. How many different codes are consists of four digits. The first digit cannot many different codes are available? 2. Decide whether each object is a permutation or a combination a) a telephone number b) a social security number c) a hand of cards in poker d) a committee of politicians e) the "combination" on a student gym locker...

  • Fleda's Beauty Company has $200,000 of total assets and earns 20 percent interest and taxes on...

    Fleda's Beauty Company has $200,000 of total assets and earns 20 percent interest and taxes on these assets. The ratio of total debts to total assets (or DR been set at 50 percent. The interest rate on short-term debt is 7 percent, while the interest rate on long-term debt is 10 percent. A conservative policy calls for only long-term debt with no short-term debt; an intermediate policy calls for 50 percent short-term debt and 50 percent long-term debt; and an...

  • Dan Price, the founder of Gravity Payments, a small, privately owned company that provided high-service and...

    Dan Price, the founder of Gravity Payments, a small, privately owned company that provided high-service and low-cost credit card processing, surprised his 120-person staff when he announced that over the next three years he would raise the salary of all employees, even the lowest paid clerk, customer service representative, and salesperson, to a minimum of $70,000. The average annual salary at that time at Gravity was around $48,000, so the increase would nearly double some employees’ salaries. Price explained that...

  • True Coop Community Bank – A Balanced Scorecard Case True Coop Community Bank (TCCB) is located...

    True Coop Community Bank – A Balanced Scorecard Case True Coop Community Bank (TCCB) is located in the Midwest US and has a total of 10 branches grouped into two divisions, the southern division (SD) and the northern division (ND). Each division consists of five branches; each branch employs a branch president, branch vice-president/chief loan officer, customer service representatives, loan representatives, mortgage loan originators, head tellers, tellers, and administrative assistants. All branches are located within a 60-mile radius. TCCB has...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT