p under = .4
p not under = .6
p all five not under = .6^5
add p of 2 under + 3 under + 4 under + 5 under
or more easily 1 - (p 0 under + p 1 under)
p 0 under = .6^5 = .0778
p 1 under = C(5,1) * .4^1*.6^4 =.2592
so 1 - .2592 -.0778 = .663
The Middlecreek Branch of the National Bank of Virginia has 10 real estate loans over $1,000,000. Of these 10 loans, 4 are "underwater." A loan is underwater if the amount of the loan is greater than the value of the property. The chief loan officer decided to randomly slect five of these loans to determine if they met all banking standards.
a. Waht is the probability that none of the selected loans is underwater?
b. What is the probability that 2 or more of the selected loans is underwater?
1 answer