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Historically, the Default Rate on a Certain Type of Commercial

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Historically, the default rate on a certain type of commercial loan is 20 percent. If a bank makes 100 of these loans, what is the approximate probability that at least 26 will result in default?


Definitions:

Price Ceiling

A government-imposed maximum price that can be charged for a good or service, intended to protect consumers.

Crude Oil

A naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials that can be refined to produce usable products such as gasoline, diesel, and various forms of petrochemicals.

Price Control

Government-imposed limits on the prices that can be charged for goods and services in a market, usually to curb inflation or protect consumers.

Price Ceiling

A legal maximum price that can be charged for a good or service.

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