A credit card company has found that 0.1% of all transactions are fraudulent. It has developed a computer program that correctly identifies whether a transaction is fraudulent or not 99% of the time. If the program scans 5,000,000 transactions, about how many of them will it identify as fraudulent?

Question

Mathematics

Nathalia Lara

9 January, 16:50

A credit card company has found that 0.1% of all transactions are fraudulent. It has developed a computer program that correctly identifies whether a transaction is fraudulent or not 99% of the time. If the program scans 5,000,000 transactions, about how many of them will it identify as fraudulent?

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Rory Harmon · Answer 1

Given:

0.1% of all transactions are fraudulent

99% correct identification whether a transaction is fraudulent or not.

Scanned 5,000,000 transactions.

5,000,000 x 0.1% = 5,000 fraudulent transactions.

For me, there are 5,000 fraudulent transactions. This is based on the 0.1% rather than the 99%. Because the problem clearly states that the 0.1% of ALL transaction is identified as fraudulent. The 99% of the computer program only deals with the correct identification of the transaction as either fraudulent or not. For me, it is not a clear measure of the true number of fraudulent transactions.