document.write( "Question 128858This question is from textbook applied staistics in business and economics
\n" ); document.write( ": The default rate on government-guaranteed student loans at a certaing public 4-year institution is 7% (a) If 1,000 student loans are made, what is the probability of fewer than 50 defaults? (b) More than 100? Show your work carefully.
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Algebra.Com's Answer #94243 by stanbon(75887)\"\" \"About 
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The default rate on government-guaranteed student loans at a certain public 4-year institution is 7%
\n" ); document.write( "(a) If 1,000 student loans are made, what is the probability of fewer than 50 defaults?
\n" ); document.write( "It's a binomial problem but the large n requires using a normal approximation.
\n" ); document.write( "mean = np = 1000*0.07 = 70
\n" ); document.write( "std = sqrt(npq) = sqrt(70*0.93) = 8.0685
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\n" ); document.write( "z(50) = (50-70)/[8.0685] = -2.4788
\n" ); document.write( "P(# of defaults < 50) = P(z<-2.4788) = 0.0066
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\n" ); document.write( "\n" ); document.write( " (b) More than 100?
\n" ); document.write( "z(100) = (100-70)/8.0685 = 3.7182
\n" ); document.write( "P(defaults > 100) = P(z>3.7182) = 0.00010035..
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\n" ); document.write( "Cheers,
\n" ); document.write( "Stan H. \n" ); document.write( "
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