Ela Jackiewicz

Mat 119 Exam #4 Key

In problem #1 just set-up.

1.) The 5-card hand is drawn from an ordinary deck of 52 cards.

a.) (7 points) Compute the probability that exactly two cards are hearts.

C(13.2)*C(39,3)

------= .274

C(52,5)

b.) (7 points) Compute the probability that no more than 4 cards are hearts.

(hint: use opposite event)

1 - P(all 5 hearts) = 1-C(13,5)/C(52,5)

In problem #2 just set-up.

2.) At the New Year's party you find yourself in a company of 5 strangers (so, there

are 6 of you)

a. (7 points) What is the probability that all of you have different birthdays?

P(365,6)/ 3656

b. (7 points) What is the probability that at least 2 of you were born in the same

month? (hint: use opposite event)

1 - P(all born in different months) =1 - P(12,6)/126

3. Assume the probability of having a boy is 51% and the probability of having a

girl is 49%. What is the probability that in a family of five children:

a). (7 points) First 3 children are boys, the rest are girls ?

P(BBBGG)= (.51)3*(.49)2 = .032

b). (7 points) At least one child is a boy?

1 - P(all 5 girls) = 1-(.49)5 = .972

4. U.S. Resident Population, by Race and Age, as of July 1, 1998. Adapted from

[Data is in millions of people, rounded to

the nearest tenth of a million people. "White" includes Hispanic. "Other"

includes American Indian, Eskimo, Aleut, Asian, and Pacific Islander.]

AGE / White / Black / Other / total
Under age 20 / 61.4 / 12.0 / 4.2 / 77.6
Age 20 - 39 / 63.9 / 10.9 / 4.2 / 79
Age 40 or over / 97.6 / 11.5 / 4.4 / 113.5
total / 222.9 / 34.4 / 12.8 / 270.1

A July 1, 1998 U.S. resident is selected at random. Find the probability that the resident

a). (5 points) Is Under age 20.

77.6/270.1= .287

b). (5 points) Is age 40 or over and Black.

11.5/270.1 =.043

c). (5 points) Is White, given that the person is Age 20-39.

63.9/79 = .81

In problem #5 just set-up.

5. A manufacturer of transformers knows that about 3% of his transformers are

defective. He ships 70 random transformers to one of his clients.

Use the binomial probability model to answer questions a and b.

a). (7 points) Calculate the probability that the customer has received exactly 7

bad transformers.

C(70,7)(.03)7(.97)63 = .00385

b). (7 points) Calculate the probability that the customer has received at least 2

bad transformers. (hint: use opposite event)

1 - P (1 bad or 0 bad transformers)

= 1 -[ C(70,1)(.03)1(.97)69 + C(70,0)(.03)0(.97)70] = .625

6. Probability that Professor Jones is late for his lecture is 0.20. If he is on time, the

probability that he will give a quiz is 0.6. If he is late, the probability that he will

give a quiz is only 0.35.

a). (8 points) Draw a tree diagram (with all probabilities marked) for this

problem.


b). (7 points) One random day, Professor Jones gave a quiz, what is the

probability that he was late that day?

P(late/Q) = [(.2)(.35)] / [(.2)(.35)+(.8)(.6)] = .127

7. Your company is considering purchasing insurance for a loan it made. If the

borrower pays the loan in full, then the company makes $125,000. If the

borrower defaults on the loan, the company can sell the house and make

$30,000. History shows that the probability that the person will default is 0.3.

a.) (6points) What are your company's expected earnings?

E= ($125,000)*(.7) + ($30,000)*(.3) = $96,5000

b.) (6 points) The insurance company will charge you $10,000 for $70,000 worth of insurance that pays only if the borrower defaults. What are the expected earnings if the company buys the insurance?

If client defaults bank's profit is: $30.000+$70,000-$10.000=$90,000

If he does not default, bank's profit is: $125,000-$10,000=$115,000

E= (.3)*($90,000) + (.7)*($115,000) = $107,500

c.) (2 points) Based on parts a and b, should the company buy the insurance?

Expected profit is larger with insurance, so the bank will not lose on average if it will decide to purchase one.