A check-cashing service has found that approximately 5% of all checks submitted to the service for cashing are bad. After instituting a check verification system to reduce its losses, the service found that only 45 checks were bad in a total of 1124 cashed. a). Based on a 95% confidence level, what is the best case and worst case scenario regarding the percentage of bad checks? b). Carefully interpret this interval estimation. c). Using the results of part (a), explain carefully whether or not there is sufficient evidence to conclude that the system has been effective? Explain carefully.
A check-cashing service has found that approximately 5% of all checks submitted to the service for cashing are bad. After instituting a check verification system to reduce its losses, the service found that only 45 checks were bad in a total of 1124 cashed. a). Based on a 95% confidence level, what is the best case and worst case scenario regarding the percentage of bad checks? b). Carefully interpret this interval estimation. c). Using the results of part (a), explain carefully whether or not there is sufficient evidence to conclude that the system has been effective? Explain carefully.
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Question
A check-cashing service has found that approximately 5% of all checks submitted to the
service for cashing are bad. After instituting a check verification system to reduce its
losses, the service found that only 45 checks were bad in a total of 1124 cashed.
a). Based on a 95% confidence level, what is the best case and worst case scenario
regarding the percentage of bad checks?
b). Carefully interpret this
c). Using the results of part (a), explain carefully whether or not there is sufficient
evidence to conclude that the system has been effective? Explain carefully.
Expert Solution
Step 1
Given:
n = 1124
x = 45
p = x/n = 45/1124 = 0.04
P = 5% = 0.05
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