probability

Question

a Bank reports that 8 % of its credit cardholders will default at some point in time in their lives. one of its branch just mailed 12 new cards today

1. How many of these new cardholders would you expect to default? What is their standard deviation?
2. What is the likelihood (probability) that none of the card holders will default?
3. What is the likelihood that at least two will default?

Answer 1

E[X]=0.96, σ≈0.94σ≈0.94

P(none default)≈0.368P(none default)≈0.368 (36.8%)

P(at least two default)≈0.249P(at least two default)≈0.249 (24.9%)