A local bank reviewed its credit card policy with the intention of Recalling some of its credit card.In the past approximately 5% of cardholders defaulted, leaving the bank unable to collect the outstanding balance.Hence, management established a prior probability of 0.05 that any particular cardholder will default .The bank also found that the probability of missing a monthly payment is 0.20 for customers who do not default.Of course the probability of missing our monthly payment for those who default is 1 .Given that the customer missed one or more monthly payments compute the posterior probability that the customer will default .The bank would like to recall its card if the probability that a customer will default is greater than 0.20 should the bank record it's card if the customer misses a monthly payment? Why or why not?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
A local bank reviewed its credit card policy with the intention of Recalling some of its credit card.In the past approximately 5% of cardholders defaulted, leaving the bank unable to collect the outstanding balance.Hence, management established a prior
b) Playing video and computer games is very popular. Over 70% of households play such games.
i) Of those individuals who play video and computer games, 18% are under 18 years old, 53% are 18-59 years old, and 29% are all 59 years old. For a sample of 800 people who play these games, how many would you expect to be under 18 years of age?
ii) For a sample of 600 people who play these games, what is the probability that fewer than 100 will be under 18 years of age?
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