Recently, FHA mortgages, which are insured by the federal government, accounted for 28% of all home-purchase mortgages that were approved. A random sample of 150 mortgage applications was selected. What is the probability that 48 or more from this sample were insured by the FHA?

15.87% probability that 48 or more from this sample were insured by the FHA

Step-by-step explanation:

I am going to use the normal approximation to the binomial 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

What is the probability that 48 or more from this sample were insured by the FHA?

Using continuity correction, this is , which is 1 subtracted by the pvalue of Z when X = 47.5. So

has a pvalue of 0.8413.

1 - 0.8413 = 0.1587

15.87% probability that 48 or more from this sample were insured by the FHA

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step-by-step explanation:

fist on the left goes with the third on the right. second on the left goes with the fourth on the right. third on the left goes with the second on the right. the fourth on the left goes with first on the right