What type of probability distribution will the consulting firm most likely employ to analyze 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.

Question

Quizplus · Accepted Answer

The consulting firm is interested in analyzing the proportion of false insurance claims in a sample of 100 claims from the insurance company. This type of problem can be modeled using a binomial distribution, which is suitable for analyzing the number of successes (or failures) in a fixed number of independent trials, where each trial has the same probability of success. In this case, the probability of a false claim in the insurance industry is known (3%), and the sample size is fixed (100). Therefore, the binomial distribution is the most appropriate choice for analyzing this problem.

What Type of Probability Distribution Will the Consulting Firm Most