Question: 12.9 Using Benford's law. According to Benford's law (Example 9.6, page 171) the prob ability that the first digit of the amount of a randomly

12.9 Using Benford's law. According to Benford's law (Example 9.6, page 171) the prob ability that the first digit of the amount of a randomly chosen invoice is a 1 or a 2 is 0.477. You examine 90 invoices from a vendor and find that 29 have first digits 1 or 2. If Benford's law holds, the count of Is and 2s will have the binomial distribution with n = 90 and p = 0.477. Too few Is and 2s suggests fraud. What is the approximate probability of 29 or fewer if the invoices follow Benford's law? Do you suspect that the invoice amounts are not genuine?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Essential Statistics Questions!