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Problem: The Credit Risk Department of a major bank estimates the default rate on loans under $ 10,000 to be 5 %. The bank will make 1900 loans that are under $10,000 next month.
Required:
Question 1: Find the mean of p hat, where p hat is the proportion of defaults on the 1900 loans under $10,000 to be made next month.
Question 2: Find the standard deviation of p
Question 3: Compute an approximation for P hat (p ≥ 0.06) which is the probability that 6 % or more of next month's loans under $ 10,000 will be defaulted on. Round your answer to four decimal places.
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