Solution to Global insurance has found that 20% (1 in 5) of all insurance policies are surrendered … - Sikademy
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Archangel Macsika

Global insurance has found that 20% (1 in 5) of all insurance policies are surrendered (cashed in) before their maturity date. Assume that 10 policies are randomly selected from the policies data base What is the probability that: Atleast 2 out of the 10 randomly selected policies will be surrendered before their maturity date?

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Here's the Solution to this Question

Let X= the numbers of insurance policies surrendered (cashed in) before their maturity date: X\sim Bin (n, p).

Given n=10, p=0.2,q=0.8


P(X\ge2)=1-P(X=0)-P(X=1)

=1-\dbinom{10}{0}(0.2)^0(0.8)^{10-0}-\dbinom{10}{1}(0.2)^1(0.8)^{10-1}

=1-0.1073741824-0.268435456

=0.6241903616

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