Based on past experience,a bank believes that 9% of the people who receive loans will not make payments on time.The bank has recently approved 300 loans.Describe the sampling distribution model of the proportion of clients in this group who may not make timely payments.
A)Binom(300,9%)
B)N(9%,0.5%)
C)N(91%,1.7%)
D)N(9%,1.7%)
E)There is not enough information to describe the distribution.

Question

Quizplus · Accepted Answer

The sampling distribution of the proportion of clients who may not make timely payments can be modeled using a normal distribution N(p, sqrt(p(1-p)/n)), where p is the probability of not making timely payments (9% or 0.09) and n is the sample size (300). The standard deviation is sqrt(0.09*0.91/300) which is approximately 1.7%.

Based on Past Experience,a Bank Believes That 9% of the People