The Manager for State Bank and Trust Has Recently Examined

question 114

Multiple Choice

The manager for State Bank and Trust has recently examined the credit card account balances for the customers of her bank and found that 20% have an outstanding balance at the credit card limit. Suppose the manager randomly selects 15 customers and finds 4 that have balances at the limit. Assume that the properties of the binomial distribution apply. What is the probability that 4 or fewer customers in the sample will have balances at the limit of the credit card?

• A) 0.1876
• B) 0.8358
• C) 0.6482
• D) 0.3832

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Definitions:

Scheduled Payments

Scheduled payments are pre-determined amounts of money that are paid at regular intervals, often as part of a loan or mortgage repayment plan.

Conditional Sale Contracts

Conditional sale contracts are agreements where the sale of an asset or property is contingent upon certain conditions being met, often related to financing or inspection approvals.

Credit Sales

Transactions where goods or services are sold and payment is delayed, often creating accounts receivable.

Compounded Monthly

Interest calculation method that adds interest to the principal balance monthly, increasing the amount of subsequent interest.