THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
Investment A has an expected return of 8% with a standard deviation of 2.5%.Investment B has an expected return of 6% with a standard deviation of 1.2%.Assume you invest equally in both investments and that the rates of return are independent.
-A hospital finds that 20% of its accounts are at least 60 days in arrears.A random sample of 500 accounts was taken.What is the probability that fewer than 120 accounts in the sample were at least 60 days in arrears?
A)0.9875
B)0.4875
C)0.5125
D)0.0125

Question

Quizplus · Accepted Answer

The probability can be calculated using the normal approximation to the binomial distribution. The expected number of accounts in arrears is 100 (20% of 500), and the standard deviation is approximately 8.94. Using the normal distribution, the probability that fewer than 120 accounts are in arrears is approximately 0.9875.