1. A survey of 100 MBA students found that 75 owned mutual funds, 45 owned stocks, and 25 owned both.

a. What is the probability that a student owns a stock? A mutual fund?

b. What is the probability that a student owns neither stocks nor mutual funds?

c. What is the probability that a student owns either a stock or mutual fund?

Probability Rules and Calculations

Rule 1. The probability associated with any outcome must be between 0 and 1.

Rule 2. The sum of the probabilities over all possible outcomes must be 1.0.

Rule 3. The probability of any event is the sum of the probabilities of the outcomes that compose that event.

Rule 4. If events A and B are mutually exclusive, then P(Aor B) = P(A) + P(B).

Rule 5. If two events A and B are not mutually exclusive, then P(A or B) = P(A) + P(B) - P(A and B).