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Internal auditors sometimes check random samples of transactions within a database. Suppose that in a particular set of transactions, 2% contain an...
Internal auditors sometimes check random samples of transactions within a database. Suppose that in a particular set of transactions, 2% contain an error of some kind. The auditor takes a random sample of 20 transactions for checking. Let X denote the number of transactions found to be in error in the sample.
(a) State the probability distribution of X (including the values of all parameters) and find the probability that 2 transactions are found to be in error.
(b) If three or more transactions are found to be in error then a larger sample is taken for checking. How often will this happen? (Use the appropriate template).
(c) What assumption is required for the validity of the above answers?
Data
Sample size100
Probability of success0.2
Statistics
Mean20
Variance16
Standard deviation4
Binomial Probabilities Table
XP(X)Cumulative
00.000000.00000
10.000000.00000
20.000000.00000
30.000000.00000
40.000000.00000
50.000010.00002
60.000060.00008
70.000200.00028
80.000580.00086
90.001480.00233
100.003360.00570
110.006880.01257
120.012750.02533
130.021580.04691
140.033530.08044
150.048060.12851
160.063830.19234
170.078850.27119
180.090900.36209
190.098070.46016
200.099300.55946
210.094570.65403
220.084900.73893
230.071980.81091
240.057730.86865
250.043880.91252
260.031640.94417
270.021680.96585
280.014130.97998
290.008770.98875
300.005190.99394
310.002930.99687
320.001580.99845
330.000810.99926
340.000400.99966
350.000190.99985
360.000090.99994
370.000040.99998
380.000020.99999
390.000011.00000
400.000001.00000
410.000001.00000
420.000001.00000
430.000001.00000
440.000001.00000
450.000001.00000
460.000001.00000
470.000001.00000
480.000001.00000
490.000001.00000
500.000001.00000
510.000001.00000
520.000001.00000
530.000001.00000
540.000001.00000
550.000001.00000
560.000001.00000
570.000001.00000
580.000001.00000
590.000001.00000
600.000001.00000
610.000001.00000
620.000001.00000
630.000001.00000
640.000001.00000
650.000001.00000
660.000001.00000
670.000001.00000
680.000001.00000
690.000001.00000
700.000001.00000
710.000001.00000
720.000001.00000
730.000001.00000
740.000001.00000
750.000001.00000
760.000001.00000
770.000001.00000
780.000001.00000
790.000001.00000
800.000001.00000
810.000001.00000
820.000001.00000
830.000001.00000
840.000001.00000
850.000001.00000
860.000001.00000
870.000001.00000
880.000001.00000
890.000001.00000
900.000001.00000
910.000001.00000
920.000001.00000
930.000001.00000
940.000001.00000
950.000001.00000
960.000001.00000
970.000001.00000
980.000001.00000
990.000001.00000
1000.000001.00000