Ten Policyholders File Claims with CareFree Insurance

question 36

Multiple Choice

Ten policyholders file claims with CareFree Insurance.Three of these claims are fraudulent.Claims manager Earl Evans randomly selects three of the ten claims for thorough investigation.If x represents the number of fraudulent claims in Earl's sample, P(x=1) is _______________.

• A)0.5250
• B)0.4410
• C)0.3000
• D)0.6957
• E)0.9957

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Definitions:

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Contributed Capital

Funds raised by a company in exchange for its shares, representing the equity capital contributed by the shareholders.

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in a given period, and must be paid out before common shareholders can receive dividends.

Noncumulative Preferred Stock

A type of preferred stock where dividends are not accumulated if they are not declared.