ranted. An analysis of the records of one bank produced the following probabilities. Score Loan Performance Under 400 400 or More Fully repaid .19 .64 Defaulted .13 .04 a) What proportion of loans are fully repaid? b) What proportion of loans given to scorers of less than 400 fully repay? c) What proportion of loans given to scorers of 400 or more fully repay?
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.
Credit scorecards are used by financial institutions to help decide to whom loans should
be granted. An analysis of the records of one bank produced the following probabilities.
Score
Loan Performance Under 400 400 or More
Fully repaid .19 .64
Defaulted .13 .04
a) What proportion of loans are fully repaid?
b) What proportion of loans given to scorers of less than 400 fully repay?
c) What proportion of loans given to scorers of 400 or more fully repay?
d) Are score and whether the loan is fully repaid independent? Explain.
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