Investment advisors agree that near-retirees, defined as people aged 55 to 65, s

Question

Investment advisors agree that near-retirees, defined as people aged 55 to 65, should have balanced portfolios. Most advisors suggest that the near-retirees have no more than 50% of their investments in stock However, during the huge de ne n the stock market n2008, 22% of near et eeshad 85% or more of their investments in stocks. Suppose you have a random sample of 10 people who would have been labeled as near-retirees in 2008. Complete parts (a) through (d) below a. What is the probability that dunng 2008 none had 85% or more of their investment in stocks? The probability is (Round to four decimal places as needed.)

Explanation / Answer

Probability of a person not having 85% or more in stocks is 1 - .22 = .78

Probability of 10 of 10 people not having 80% or more in stocks is .78^10 = .08335 (answer)

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