Question

A mutual fund company offers its customers several different funds: a money market fund, three different bond funds, two stock funds, and a balanced fund. Among customers who own shares in just one fund, the percentages of customers in the different funds are as follows:

Money market 20%
Short-term bond 15%
Intermediate-term bond 11%
Long-term bond 5%
High-risk stock 18%
Moderate-risk stock 24%
Balanced fund 7%
A customer who owns shares in just one fund is to be selected at random.
a. What is the probability that the selected individual owns shares in the balanced fund?
b. What is the probability that the individual owns shares in a bond fund?
c. What is the probability that the selected individual does not own shares in a stock fund?

Answer 1

Explanation:

Money market 20%

Short-term bond 15%

Intermediate-term bond 11%

Long-term bond 5%

High-risk stock 18%

Moderate-risk stock 24%

Balanced fund 7%

a) Here, it can be seen that the probability that the selected individual owns shares in the balanced fund is 0.07

b)

Short-term bond 15%

Intermediate-term bond 11%

Long-term bond 5%

Total 31%

So it can be observed that the probability that the individual owns shares in a bond fund is 0.31

c)

High-risk stock 18%

Moderate-risk stock 24%

Total 42%

So it is observable that the probability of an individual having a shares in a stock fund is 42%. However, if we need to find probability that an indiividual does not own shares in a stock fund: 1 - 0.42 = 0.58