Question

21. Loans Based on past experience, a bank believes that 7% of

the people who receive loans will not make payments on time.
A bank auditor randomly selects 200 loans.
a) What are the mean and standard deviation of the proportion
of clients in this group who may not make timely payments?

Answer 1

Explanation:

Mean 0.7 and standard deviation 0.018

p = 0.07

n = 200

q = 1 - 0.07 which = 0.93

u = 0.07

o = (p * q) / n =
`√((0.07)(0.93)/200)` = 0.018