March 30, 2017

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Assume that about 45% of all U.S. adults try to pad their insurance claims. Suppose that you are the director of an insurance adjustment office. Your office has just received 110 insurance claims to be processed in the next few days. What is the probability that fewer than 45 of the claims have been padded?

  • statistics - ,

    Your values are the following:
    p = .45, q = 1 - p = .55, x = 45, and n = 110

    Use the normal approximation to the binomial distribution.

    Find mean and standard deviation.
    mean = np = (100)(.45) = ?
    sd = √npq = √(100)(.45)(.55) = ?

    Once you determine the mean and standard deviation, use z-scores and z-table to find probability:

    z = (x - mean)/sd

    Substitute the values into the formula. Once you have the z-score, determine your probability using a z-table.

    I hope this will help get you started.

  • statistics - ,

    Use 110 for n.

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