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The accounts of 4,500 credit card customers out of a sample of 40,000 that were reviewed did not perform satisfactorily. The credit scores assigned to
The accounts of 4,500 credit card customers out of a sample of 40,000 that were reviewed did not perform satisfactorily. The credit scores assigned to these applicants when originall}r assessed had a mean of T0 and standard deviation of 8. The scores of the remaining customers hadameanof? andastandard deviation of 12. Assuming these distributions are aprnoairnately normal, if the cut-off score was revised upward to 82. (i) Complete the following table: Mean credit score Standard deviation of credit score Probabil' of receivin credit \"A Probability of beirlg denied credit [3%) (ii) The original default rate on the sample of 40,000 card holders was extremely high. What impact would be setting the cuto'at 82 have on the default rate? Show calculations. 15 this adjustment reasonable? Discuss
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