An insurance company predicts a 10% chance of an accident for drivers in a year. Out of 500 drivers, 65 report accidents.

The actual proportion of drivers who reported accidents is 65 ÷ 500 = 0.13, or 13%. Since 13% is greater than the predicted 10% chance, the observed rate is greater than the theoretical probability. The correct choice is “It is greater than the theoretical probability.”

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