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mean and sample standard deviation for a credit card company

Credit card companies frequently use statistics to monitor their customerââ?¬â?¢s accounts for fraudulent activities. If any ââ?¬Å"unusualââ?¬Â? activity is noticed, the customer is contacted to make sure that the credit card has not been compromised. Listed below are the daily charges on a specific customerââ?¬â?¢s credit card during one month (any day when the card was not used is excluded from the database).

Daily charges:
143, 166, 113, 188, 133, 90, 89, 98, 95, 112, 111, 79, 212, 20, 112, 70, 174, 68, 101, 46

a) Determine the mean and sample standard deviation of daily charges. Clearly label your answers, and report all answers to two decimal places.

b) In a simplistic example, suppose that your credit card company defines ââ?¬Å"unusual activityââ?¬Â? as a daily charge that is greater than 98% of all charges on the card. Assuming that a personââ?¬â?¢s credit card charges approximately follow a Normal Distribution, accurately determine the charge amount that must be exceeded before the customer is contacted.

c) How many of the charges, if any, would have been flagged as suspicious activity?

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Solution Preview

Since you are asking for part b), I will assume that you know how to do part a).

The mean and sample standard deviation are mean = 111 and std. dev. = 46.65.

If you look up on a normal ...

Solution Summary

Determine the mean and sample standard deviation for a credit card company