A group of realtors estimates that 23% of all homes purchased last year were considered investment properties.
If a sample of 800 homes sold last year is obtained, what is the probability that at most 200 homes are going to used as investment property?

90.99% probability that at most 200 homes are going to used as investment property

Step-by-step explanation:

I am going to use the binomial approximation to the normal to solve this question.

Binomial probability distribution

Probability of exactly x sucesses on n repeated trials, with p probability.

Can be approximated to a normal distribution, using the expected value and the standard deviation.

The expected value of the binomial distribution is:

The standard deviation of the binomial distribution is:

Normal probability distribution

Problems of normally distributed samples can be solved using the z-score formula.

In a set with mean and standard deviation , the zscore of a measure X is given by:

The Z-score measures how many standard deviations the measure is from the mean. After finding the Z-score, we look at the z-score table and find the p-value associated with this z-score. This p-value is the probability that the value of the measure is smaller than X, that is, the percentile of X. Subtracting 1 by the pvalue, we get the probability that the value of the measure is greater than X.

When we are approximating a binomial distribution to a normal one, we have that , .

In this problem, we have that:

So

If a sample of 800 homes sold last year is obtained, what is the probability that at most 200 homes are going to used as investment property?

This is the pvalue of Z when X = 200. So

has a pvalue of 0.9099

90.99% probability that at most 200 homes are going to used as investment property

use distributive property on all like terms and change your signs if you have a double negative or if you have positive/negative