Exam 5: Discrete Probability Distributions

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.

SCENARIO 5-1 There are two houses with almost identical characteristics available for investment in two different neighborhoods with drastically different demographic composition.The anticipated gain in value when the houses are sold in 10 years has the following probability distribution: -Referring to Scenario 5-1, if you can invest 10% of your money on the house in neighborhood A and the remaining on the house in neighborhood B, what is the portfolio risk of your investment?

True or False: Suppose that a judge's decisions follow a binomial distribution and that his verdict is incorrect 10% of the time.In his next 10 decisions, the probability that he makes fewer than 2 incorrect verdicts is 0.736.

SCENARIO 5-2 Two different designs on a new line of winter jackets for the coming winter are available for your manufacturing plants.Your profit (in thousands of dollars)will depend on the taste of the consumers when winter arrives.The probability of the three possible different tastes of the consumers and the corresponding profits are presented in the following table. -Referring to Scenario 5-2, what is the standard deviation of your profit when Design B is chosen?

True or False: The covariance between two investments is equal to the sum of the variances of the investments.

The portfolio expected return of two investments

SCENARIO 5-2 Two different designs on a new line of winter jackets for the coming winter are available for your manufacturing plants.Your profit (in thousands of dollars)will depend on the taste of the consumers when winter arrives.The probability of the three possible different tastes of the consumers and the corresponding profits are presented in the following table. -Referring to Scenario 5-2, what is the total variance of the profit if you increase the shift of your production lines and choose to produce both designs?

On the average, 1.8 customers per minute arrive at any one of the checkout counters of a grocery Store.What type of probability distribution can be used to find out the probability that there will Be no customer arriving at a checkout counter?

If the outcomes of a variable follow a Poisson distribution, then their

What type of probability distribution will most likely be used to analyze the number of blue Chocolate chips per bag in the following problem? The quality control manager of a candy plant is inspecting a batch of chocolate chip bags. When the production process is in control, the mean number of blue chocolate chips per bag Is 6.0.The manager is interested in analyzing the probability that any particular bag being Inspected has fewer than 5.0 blue chocolate chips.

The local police department must write, on average, 5 tickets a day to keep department revenues At budgeted levels.Suppose the number of tickets written per day follows a Poisson distribution With a mean of 6.5 tickets per day.Interpret the value of the mean.

SCENARIO 5-1 There are two houses with almost identical characteristics available for investment in two different neighborhoods with drastically different demographic composition.The anticipated gain in value when the houses are sold in 10 years has the following probability distribution: -Referring to Scenario 5-1, what is the standard deviation of the value gain for the house in neighborhood B?

SCENARIO 5-1 There are two houses with almost identical characteristics available for investment in two different neighborhoods with drastically different demographic composition.The anticipated gain in value when the houses are sold in 10 years has the following probability distribution: -Referring to Scenario 5-1, if you can invest half of your money on the house in neighborhood A and the remaining on the house in neighborhood B, what is the portfolio risk of your investment?

True or False: The number of customers arriving at a department store in a 5-minute period has a binomial distribution.

SCENARIO 5-2 Two different designs on a new line of winter jackets for the coming winter are available for your manufacturing plants.Your profit (in thousands of dollars)will depend on the taste of the consumers when winter arrives.The probability of the three possible different tastes of the consumers and the corresponding profits are presented in the following table. -Referring to Scenario 5-2, what is the expected profit if you increase the shift of your production lines and choose to produce both designs?

Which of the following about the binomial distribution is not a true statement?

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