A Local Bank Reviewed Its Credit Card

Statistics: A local bank has revised its credit card policy to withdraw some of its credit cards. ? 3

About 5% of cardholders default, which prevents the bank from receiving the amount due. The management has set a 0.05 probability that the owner of a particular card will fail. The bank also found that the probability of a reduction in monthly payments for non-paying customers was 0.20. Obviously, this barrier is likely to fail the monthly payment 1. Assuming the customer has waived one or more monthly payments, determine the next possibility that the customer will fail.

Help!

P [does not pay and does not pay] = 0.05 * 1 = 0.05

P [standard and non-standard] = 0.95 * 0.2 = 0.19

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A Local Bank Reviewed Its Credit Card