Customers at the Bank of Commerce of Idaho Falls, Idaho, default at a rate of .005 on small home-improvement loans. The bank has approved 400 small home-improvement loans.
Assuming the Poisson probability distribution applies to this problem:
a. What is the probability that no homeowners out of the 400 will default?
b. How many of the 400 are expected not to default?
c. What is the probability that three or more homeowners will default on their small home- improvement loans?