A manager randomly selected 26 large cash transactions at a bank that were made in January. The manager then carefully tracked down the details of these transactions to see that the correct procedures for reporting these large transactions were followed. This bank typically makes 1,300 such transactions monthly. (a) Is it appropriate to use a binomial model in this situation?
(b) If the chance for a procedural error is 10% is it likely that the auditor finds more than 2 such transactions? For this component, argue informally, without computing the probability, from the characteristics of the binomial model.
(c) Find the probability in part b.
(a) Is it appropriate to use a binomial model in this situation?
Yes
No
(b) Is it likely that the auditor finds more than 2 transactions with a procedural error?
Yes
No
(c) Find the probability that the auditor finds more than 2 transactions with a procedural error.
The probability that the auditor finds more than 2 transactions with a procedural error is approximately Round to three decimal places as needed.)