Use the Appropriate Normal Distribution to Approximate the Resulting Binomial

question 52

Multiple Choice

Use the appropriate normal distribution to approximate the resulting binomial distribution. The manager of Madison Finance Company has estimated that, because of a recession year, 5% of its 400 loan accounts will be delinquent. If the manager's estimate is correct, what is the probability that 11 or more of the accounts will be delinquent?

• A) The probability is 0.9891.
• B) The probability is 0.9994.
• C) The probability is 0.8137.
• D) The probability is 0.9854.

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Definitions:

Seasonal Factor

A variable that adjusts data to account for seasonal effects, allowing for more accurate analysis by compensating for predictable fluctuations.

Multiplicative Form

A mathematical expression where quantities are multiplied together, often used in statistical models to represent relationships between variables that have an exponential or geometric effect.

Additive Form

A mathematical or modeling technique where components are added together to form a total, often used in calculations of sums, totals, or composite measurements.

Moving Average Forecast

A method used in forecasting that calculates the average of a series of data points over specific time intervals to identify trends.