Logo
Home Study Material Contact Search
AI Chat FREE
  1. mathematics
  2. basic math
  3. a bank classifies borrowers as "high risk" or "low

A bank classifies borrowers as "high risk" or "low risk," and 23% of its loans are...

90.2K

Verified Solution

Question

Basic Math

A bank classifies borrowers as "high risk" or "low risk," and23% of its loans are made to those in the "high risk" category. Ofall the bank's loans, 8% are in default. It is also known that 46%of the loans in default are to high-risk borrowers. Let H representthe event that a randomly selected loan is issued to a "high risk"borrower. Let D be the event that a randomly selected loan is indefault. Round your answers to 4 decimal places. Your workfor this entire problem will be hand-graded, see instructionsbelow.

a. What is the probability that a randomlyselected loan is in default and issued to a high-risk borrower?

Tries 0/5

b. What is the probability that a loan willdefault, given that it is issued to a high-risk borrower?

Tries 0/5

c. What is the probability that a randomlyselected loan is either in default or issued to a high-riskborrower?

Tries 0/5

d. A loan is being issued to a borrower who isnot high-risk. What is the probability that this loan willdefault?

Tries 0/5

e. Are events D and H independent? Justify theanswer.
Yes, because P(D) ? P(H)
Yes, because P(H | D) > P(H) + P(D)
No, because P(D ? H) ? P(D) × P(H)
No, because P(D | H) ? P(H)
Not enough information to determine

Answer & Explanation Solved by verified expert
4.1 Ratings (472 Votes)
We have PH 023PD 008 PH D 046Let L be the event of a loan being in low risk categoryThus PL 1 023 077a The probability that a randomly selected    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Explain how the renal medullary osmotic gradient is generated and maintained. Describe how this is important...

Medical Sciences
Q

What are the roles of turbines and cooling towers in cycling (eg Rankine cycle) systems? Support...

Electrical Engineering
Q

A source of sound gives five beats per second when sounded with another source of...

Physics
Q

For a project Carlos must provide one cut out paper model of each type of...

Geometry
Q

Graph the parabola y 3x 30x 70 Plot five points on the parabola the vertex...

Calculus
Q

2x 20 3x 15 2x 15 3x 20

Algebra
Q

Assume that a companys current ratio is 3.0, working capital is $335,000, and the acid-test...

Accounting
Q

A company that records credit purchases in a purchases journal and records purchases returns in...

Accounting
Q

Steinberg Corporation had the following items of income & expenses in the current year: ...

Accounting
Q

X Limited paid $12 000 for 75% of Y Limited. At the date of acquisition...

Accounting
Q

I want to have $2,000,000 saved by retirement. How much do I need to save...

Accounting
Q

Prescott, Inc. began 2020 with a DTA of $50,000 Assuming taxable income of $400,000 and...

Accounting