It is estimated 29% of all adults in United States invest in stocks and that 86%

Question

It is estimated 29% of all adults in United States invest in stocks and that 86% of us. adults have investments in fixed income instruments (savings accounts, bonds, etc.). It is also estimated that 24% of US adults have investments in both stocks and fixed income instruments. (a) What is the probability that a randomly chosen stock investor also invests in fixed income instruments? Round your answer to 2 decimal places. (b) What is the probability that a randomly chosen U.s adult invests in stocks, given that she invests in fixed income instruments? Round your answer to 2 decimal places

Explanation / Answer

P(stocks) = 0.29

P(fixed income instruments) = 0.86

P(stocks and fixed income instruments) = 0.24

a) P(fixed income instruments | stocks) = P(stocks and fixed income instruments) / P(stocks)

                                                               = 0.24 / 0.29

                                                               = 0.83

b) P(stocks | fixed income instruments) = P(stocks and fixed income instruments) / P(fixed income instruments)

                                                               = 0.24 / 0.86

                                                               = 0.28

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