Question

1. 2. A local bank has 5276 accounts cross-classified by type of account and average account balance. The results are as follows: Account Checking Savings Now Money-market balance account account account account Total under $500 1020 803 21 90 1934 $500-$1000 640 774 452 112 1978 over $1000 51 659 538 116 1364 co é Interpret relative frequencies as probabilities. What is the probability that a randomly-chosen account will have a balance over $1000? What is the probability that a randomly-chosen account will be a checking account with a balance over $1000? c. What is the probability that a randomly-chosen account will be neither a checking account nor an account with a balance over $1000? Given that an account is a checking account, what is the probability that it will have a balance less than $1000? e. Is the type of account statistically independent of the balance in the account? Explain

Need help w/ this econometrics question!

Answer 1

According to Chegg policy, I would only be doing the first four questions.

a) Probability that a randomly-chosen account will have a balance over $1000=

total no. of accounts with balance over $1000/ total no. of accounts= 1364/5276= 0.258

b) Probability that a randomly-chosen account will be a checking account with a balance over $1000=

total no. of checking accounts with a balance over $1000/ total no. of accounts= 51/5276= 0.009

c) probability that a randomly-chosen account will be neither a checking account nor an account with a balance over $1000=

x/total no. of accounts

Here, x= total no. of accounts- (total no. of checking accounts + remaining accounts with a balance over $1000)

   = 5276- (1711+1313)= 5276-3024= 2252

Hence, probability= 2252/5276= 0.426

d) Probability that the account is a checking account with a balance less than $1000=

(total no. of checking accounts-checking accounts with balance over $1000)/ total number of accounts= (1711-51)/5276= 0.314