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An agent sells life insurance policies to twelve equally aged, healthy people. According to recent data, the probability of a person living in their conditions for 30 years or more is 2/5. Calculate the probability that after 30 years:

1 Answer

2 votes

Answer:

(a)0.1317

(b)0.1646

(c)0.7901

Explanation:

This is a Binomial distribution problem.

For X ∼ Bin(n, p),

[TeX]P(X = k)=\left(\begin{array}{c}n\\ k \end{array} \right)p^{k}(1-p)^{n-k}[/TeX]

(a)All five people are still living.

The number of people still living has a Binomial(n = 5, p = 2/3)

[TeX]P(X = 5)=\left(\begin{array}{c}5\\ 5 \end{array} \right)(\frac{2}{3})^{5}(\frac{1}{3})^{0}[/TeX]

=[TeX](\frac{2}{3})^{5}[/TeX]

≈0.1317

(b)Exactly two people are still living

[TeX]P(X = 2)=\left(\begin{array}{c}5\\ 2 \end{array} \right)(\frac{2}{3})^{2}(\frac{1}{3})^{3}[/TeX]

[TeX]10 X (\frac{2}{3})^{2}(\frac{1}{3})^{3}[/TeX]

≈0.1646

(c) at least three people are still living.

P(X≥3)=P(X=3)+P(X=4)+P(X=5)

[TeX]P(X=3)=\left(\begin{array}{c}5\\ 3 \end{array} \right)(\frac{2}{3})^{3}(\frac{1}{3})^{2}[/TeX]

=0.3292

[TeX]P(X = 4)=\left(\begin{array}{c}5\\ 4 \end{array} \right)(\frac{2}{3})^{4}(\frac{1}{3})^{1}[/TeX]

=0.3292

[TeX]P(X = 5)=\left(\begin{array}{c}5\\ 5 \end{array} \right)(\frac{2}{3})^{5}(\frac{1}{3})^{0}[/TeX]

≈0.1317

P(X≥3)=0.3292+0.3292+0.1317

≈0.7901

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