Capital One
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Capital One IT Development Program Interview Question (student candidate)

I interviewed in Richmond, VA and was asked:
"1 million card applications. $1 per application cost to do employment verification. 96% pass verification and get a card. 4% fail and do not get cards. Given average profits on cardholders in good standing, and average losses on accounts that default, find the % of denied cardholders that would have to default in order to justify the $1 per application verification cost ."
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Answers & Comments

of 0
Anymore info given? I think you'd either need to know the percentage of cardholders in good standing, or the percentage of cardholders in bad standing.
- Sean on Apr 8, 2012 Flag Response
of 0
This appears to be a trick question that makes you think they want to know the break-even point. However: how can someone default on a credit card that they were "denied" and never issued?
- Brian on Apr 10, 2012 Flag Response
of 1
Its hypothetical - IF they were given the card and IF they defaulted on it... how many of them would have to default in order for the losses from their accounts to justify the $1/application cost of rejecting them.
- Anonymous on Apr 16, 2012 Flag Response
of 3
I had the same case and you can ask for more info like percent in good standing etc.
- mike on Sep 15, 2012 Flag Response
of 0
Am I wrong to think that the 96% is not relevant? I think it should be (1-p)(Avg Profit)-(p)(Avg Loss) = 1M. Solve for p that justifies spending $1M to deny 4% of applications. This is of course assuming that the 96% are profitable in the net.
- Dave on Feb 23, 2014 Flag Response

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