What Type of Probability Distribution Will the Consulting Firm Most

question 1

Multiple Choice

What type of probability distribution will the consulting firm most likely employ to analyse the insurance claims in the following problem? An insurance company has called a consulting firm to determine if the company has an unusually high number of false insurance claims.It is known that the industry proportion for false claims is 3%.The consulting firm has decided to randomly and independently sample 100 of the company's insurance claims.They believe the number of these 100 that are false will yield the information the company desires.

• A) Binomial distribution.
• B) Poisson distribution.
• C) Hypergeometric distribution.
• D) None of the above.

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Definitions:

Face Value

The nominal value stated on a financial instrument, such as a bond or stock certificate, representing its legal value.

Compounded Annually

The process where interest is calculated once per year on the initial principal, including all interest from previous periods.

Equal Annual Deposits

This term refers to a series of uniform payments made or received over a period, often used in the context of saving or investment strategies.

FASB Financial Accounting Concepts

A framework of accounting standards and guidelines established by the Financial Accounting Standards Board to ensure uniformity and clarity in financial reporting.