Many students have accumulated a large amount of debt by the time they graduate

Question

Many students have accumulated a large amount of debt by the time they graduate from college. Shown below is the percentage of students graduating with debt and the average amount of debt for students graduating with debt at four national universities and at four liberal arts colleges (U.S. News and World Report, America's Best Colleges, 2008). a. If you randomly choose a graduate of Morehouse, what is the probability this individual will have graduated with debt? b. If you randomly choose one of these institutions for a follow-up study on student loans, what is the probability you will choose an institution from which over 60% of the students graduated with debt? c. If you randomly choose one of these institutions for a follow-up study on student loans, what is the probability you will choose an institution in which the average amount of debt is greater than $30,000 per student graduating with debt? d. What is the probability a student graduates from Pace without any debt? e. For Pace University, what is the average amount of debt owed per graduating student? f. In making probability calculations above, were you using the classical, relative frequency, subjective method?

Explanation / Answer

a) probability =0.94

b)as there are 5 institute out of 8 from which more then 60% of the students graduated with debt,hence

probability =5/8

c)probability =2/8=1/4=0.25

d) probability=1-0.72=0.28

e)average amount of debt=32980*0.72 =23745.6

f)relative frequency

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