A mutual fund company offers its customers several different funds: a money mark

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:

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?

Money market   20% Short-term bond   14% Intermediate-term bond   10% Long-term bond   5% High-risk stock   18% Moderate-risk stock   25% Balanced fund   8%

Explanation / Answer

(a) What is the probability that the selected individual owns shares in the balanced fund?

= 0.08

(b) What is the probability that the individual owns shares in a bond fund?

= 0.14 + 0.10 + 0.05 = 0.29

(c) What is the probability that the selected individual does not own shares in a stock fund?

= 1 - (0.18 + 0.25 + 0.08)

= 0.49

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