Question 1161871: A company prices its tornado insurance using the following assumptions:
• In any calendar year, there can be at most one tornado.
• In any calendar year, the probability of a tornado is 0.02.
• The number of tornadoes in any calendar year is independent of the number of tornados in any other calendar year.
Using the company's assumptions, calculate the probability that there are fewer than 3 tornadoes in a 18-year period.
Hint: Use the binomial distribution with n = 18 and p = 0.02.
Answer by Boreal(15235)   (Show Source):
You can put this solution on YOUR website! this would be 0,1,2 tornadoes
for 0 it would be 0.98^18=0.6951
for 1 it would be 18*0.98^17*0.02=0.2554
for 2 it would be 18C2*0.98^16)*0.02^2=0.0443
0.9948 is the sum of the three and the probability.
or 2nd VARS scroll down to binomcdf ENTER (18,0.02,2)=0.9948. (n,p,x)
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