
A bank offers loans to its customers on different types of interest rates 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 a 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:
(i) What is the probability that a customer after availing the loan will default on the loan repayment?
(ii) 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?