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) hypergeometric distribution
C) Poisson distribution
D) none of the above

Question

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) hypergeometric distribution
C) Poisson distribution
D) none of the above

Quizplus · Accepted Answer

The scenario describes a situation where the consulting firm wants to determine the number of false insurance claims in a sample. The sample is randomly and independently selected, and the probability of a false claim is constant throughout the sample. These are all characteristics of a binomial distribution, making it the most suitable choice for this scenario.

What Type of Probability Distribution Will the Consulting Firm Most