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 thissituation?

(b) If the chance for a procedural error is10%, is it likely that the auditor finds more than 2 suchtransactions? For thiscomponent, argueinformally, without computing theprobability, from the characteristics of the binomial model.

(c) Find the probability in part b.

(a) Is it appropriate to use a binomial model in thissituation?

No

Yes

(b) Is it likely that the auditor finds more than 2 transactions with a proceduralerror?

No

Yes

(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

nothing

.

(Round to three decimal places asneeded.)