•An automobile insurer has found that repair claims have a mean of $920 and a standard...

•An automobile insurer has found that repair claims have a mean of $920 and a standard deviation of $870. Suppose that the next 100 claims can be regarded as a random sample from the long-run claims process.

What is the probability that the average of the 100 claims is larger than $900?

Solutions

Expert Solution

Solution :

Given that,

mean = = 920

standard deviation = = 870

n=100

= =920

= / n = 870/ 100 = 87

P( > 900) = 1 - P( <900 )

= 1 - P[( - ) / < (900-920) /87 ]

= 1 - P(z <-0.23 )

Using z table

= 1 - 0.4090

probability= 0.5910

orchestra answered 11 months ago

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