ID: Class: 12 Subject: Math Topic: Probability Type: Case Study Year: 2025

Question:

A bank offers loan to its customers on different types of interest namely, fixed rate, floating rate and variable rate. From the past data with the bank, it is known that a customer avails loan on fixed rate, floating rate or variable rate with probabilities \(10\%\), \(20\%\) and \(70\%\) respectively. A customer after availing loan can pay the loan or default on loan repayment. The bank data suggests that the probability that a person defaults on loan after availing it at fixed rate, floating rate and variable rate is \(5\%\), \(3\%\) and \(1\%\) respectively. Based on the above information, answer the following :
  1. What is the probability that a customer after availing the loan will default on the loan repayment ?
  2. A customer after availing the loan, defaults on loan repayment. What is the probability that he availed the loan at a variable rate of interest ?