Probability of selecting credit card holders

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Question: Credit card companies are increasing their revenues by raising the late fees charged to their customers. According to a study by cardweb.com, late fees represent the third largest revenue source for card companies, after interest charges and payments from the merchants who accept their cards. In the preceding year, 58% of all credit card customers had had to pay late fees (R. Lieber, CreditCard Firms Collect Record Levels of Late Fees, The Wall Street Journal, May 21, 2002, p. D1). If a random sample of 20 credit card holders is selected, what is the probability that

a. 0 had to pay a late fee?

b. no more than 5 had to pay late fees?

c. more than 10 had to pay late fees?

d. What assumptions did you have to make to answer (a) through (c)?

Reference no: EM131689029

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