Question

In: Statistics and Probability

A loan officer in a bank estimates that the probability of default by an applicant is...

A loan officer in a bank estimates that the probability of default by an applicant is 0.025. Last month the bank approved 40 loan applications. Using Poisson distribution, find:
i) The probability that 3 loans will be defaulted.
ii) The probability that at least 3 loans will be defaulted.
iii) Find the mean and standard deviation of number of loan defaults.
iv) Comment on the relationship between the Poisson and Binomial distribution.

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Expert Solution

orchestra answered 1 year ago
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