The loan department at a local bank is reviewing the perform

The loan department at a local bank is reviewing the performance of their previous loans. Among the loans given to people with poor credit, 0.29 are in default (not being repaid). The manager notes that 0.16 of all loans are given to people with poor credit. Among loans given to people with good credit, 0.13 are in default. Calculate the proportion of loans that are in default and given to people with good credit. Input your answer in decimal form and round to two decimal places.

Solution

Answer = Loans are given to people with poor credit = 0.16 of total people

Loans given to people with poor credit and in default = 0.29 out of 0.16 = 0.16 * 0.29 =0.0464

People with good credit= 1 - 0.16 = 0.84

Loans given to people with good credit and in default = 0.13 * 0.84 = 0.1092