Homework 01.3

Banks use the binomial distribution to model the probability that a certain number of credit card transactions are fraudulent.

For example, suppose it is known that 25% of all credit card transactions in a certain region are fraudulent (This is a failure). If there are 3 transactions per day in a certain region, we can find the probability that more than a certain number of fraudulent transactions occur in a given day!

p=0.25

n=3

P(X)=\frac{n!}{X!(n-X)!}\cdot (p)^{X}\cdot (1-p)^{n-X}