The Credit Risk Department of a major bank estimates the default rate on loans under s10,000 to be s%. The bank will make 1900 loans that are under 00 $10,000 next month. Answer the following. (If necessary, consult a list of formulas.) (a) Find the mean of p, where p is the proportion of defaults on the 1900 loans under s10,000 to be made next month. (b) Find the standard deviation of p. (c) Compute an approximation for P(6<0.06), which is the probability that 6% or fewer of next month's loans under s10,000 will be defaulted on. Round your answer to four decimal places.
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
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