Question

A banks loan officer rates applicants for credit. The ratings are normally distributed with a mean of 200 and a standard deviation of 50. If 40 different applicants are randomly selected, find the probability that their mean is above 21.5.

Answer 1

2.87%

Explanation:

We have the following information:

mean (m) = 200

standard deviation (sd) = 50

sample size = n = 40

the probability that their mean is above 21.5 is determined as follows:

P (x> 21.5) = P [(x - m) / (sd / n ^ (1/2))> (21.5 - 200) / (50/40 ^ (1/2))]

P (x> 21.5) = P (z> -22.57)

this value is very strange, therefore I suggest that it is not 21.5 but 215, therefore it would be:

P (x> 215) = P [(x - m) / (sd / n ^ (1/2))> (215 - 200) / (50/40 ^ (1/2))]

P (x> 215) = P (z> 1.897)

P (x> 215) = 1 - P (z <1.897)

We look for this value in the attached table of z and we have to:

P (x> 215) = 1 - 0.9713 (attached table)

P (x> 215) =.0287

Therefore the probability is approximately 2.87%