Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized for You

we will pick new questions that match your level based on your Timer History

Track Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

It appears that you are browsing the GMAT Club forum unregistered!

Signing up is free, quick, and confidential.
Join other 500,000 members and get the full benefits of GMAT Club

Registration gives you:

Tests

Take 11 tests and quizzes from GMAT Club and leading GMAT prep companies such as Manhattan GMAT,
Knewton, and others. All are free for GMAT Club members.

Applicant Stats

View detailed applicant stats such as GPA, GMAT score, work experience, location, application
status, and more

Books/Downloads

Download thousands of study notes,
question collections, GMAT Club’s
Grammar and Math books.
All are free!

Thank you for using the timer!
We noticed you are actually not timing your practice. Click the START button first next time you use the timer.
There are many benefits to timing your practice, including:

Among a group of 2,500 people, 35 percent invest in muni.... [#permalink]

Show Tags

09 Jun 2011, 19:17

1

This post received KUDOS

4

This post was BOOKMARKED

00:00

A

B

C

D

E

Difficulty:

5% (low)

Question Stats:

84% (02:12) correct
16% (01:15) wrong based on 158 sessions

HideShow timer Statistics

Among a group of 2,500 people, 35 percent invest in municipal bonds, 18 percent invest in oil stocks, and 7 percent invest in both municipal bonds and oil stocks. If 1 person is to be randomly selected from the 2,500 people, what is the probability that the person selected will be one who invests in municipal bonds and NOT in oils stocks?

Hi, I had a doubt in the answer given by OG 12 for a probability related PS question. " The question is, Among a group of 2,500 people, 35 percent invest in municipal bonds, 18 percent invest in oil stocks, and 7 percent invest in both municipal bonds and oil stocks. If 1 person is to be randomly selected from the 2,500 people, what is the probability that the person selected will be one who invests in municipal bonds and NOT in oils stocks?

The answer is 7/25.

The explanation given is Since there are 2500 people, 2500(.35) = 875 people invest in municipal bonds, and 2,500(.07) = 175 of those people invest in both municipal bonds and oil stocks. therefore, there are 875-175 = 700 people who invest in municipal bonds but not in oil stocks. Probability of investing in municipal bonds but not in oil stocks = 700/2500 = 7/25 "

My doubt is, Cant we consider the 35 percent who have invested in municipal bonds and the 7 percent who have invested in both bonds and oil, as to separate groups rather than considering the people in the 7 percent to be a part of the 35 percent group?

Cant we just take 875/2500 = 7/20, as the answer?

Why should we do the 875-175 operation, when it 35 percent of people are only invested in municipal bonds?

Sorry for the long post.

When they say '35% invest in municipal bonds', this number includes the 7% people who invest in both (since they obviously invest in municipal bonds too). Since you want to ignore the people who invest in stocks, from 35%, you subtract 7% to get 28%. Hence, 28/100 = 7/25 of the total people invest in ONLY municipal bonds.
_________________

35% includes both municipal bond investors + oil investors. So you need to take out 7% which overlaps with 35% as you want to be sure that your 35% doesnt include any oil investor. With 28% you are 100% sure that these are all municipal bond investors
_________________

My will shall shape the future. Whether I fail or succeed shall be no man's doing but my own.

Thanks a lot for your answers. It looks like it is a standard question.

"35% includes both municipal bond investors + oil investors. " Could there be questions where the the 35% and the 7% should be considered as mutually exclusive when finding the answers?

Thanks a lot for your answers. It looks like it is a standard question.

"35% includes both municipal bond investors + oil investors. " Could there be questions where the the 35% and the 7% should be considered as mutually exclusive when finding the answers?

Yes, if they say, "35% invest in municipal bonds only and 7% invest in both," then the two are mutually exclusive.
_________________

This question will be better understood if you try the Venn Diagram approach.

I used a matrix. Maybe it was the wrong approach but I got it right. Then I got 28% for Muncipal Bonds but not Oil. Lets say there are 100 people (easier to calculate, even if you don't need it) 28% out of 100 is 7/25.

Re: Among a group of 2,500 people, 35 percent invest in muni.... [#permalink]

Show Tags

28 May 2012, 10:31

I understand the math behind this...easy problem...but I think this is poorly worded. How can you come to the absolute conclusion that the 7% in both is included in the 35% and 18%? When reading it, I see them listing it out as if it was a 3rd group instead of a shared group.

Re: Among a group of 2,500 people, 35 percent invest in muni.... [#permalink]

Show Tags

10 Dec 2012, 18:43

This problem can be handled by a straightforward matrix, the only thing that is semi-difficult is the calculations, but some handy multiplication tricks borrowed from some case interviewing skills help.

35% of 2500 is: 10% of 2500 = 250 * 3 = 750 + 1/2 of 250 = 875. 35% MB

18% of 2500 is 10% of 2500 = 250 * 2 - 1% of 2500 * 2 = 450 = 18% oil

7% of 2500 is 1% of 2500 = 25 * 7 = 175 = 7% oil.

875-175 = 700

700 divided by total investment possibilities (2500) = 7 / 25

This problem can be handled by a straightforward matrix, the only thing that is semi-difficult is the calculations, but some handy multiplication tricks borrowed from some case interviewing skills help.

35% of 2500 is: 10% of 2500 = 250 * 3 = 750 + 1/2 of 250 = 875. 35% MB

18% of 2500 is 10% of 2500 = 250 * 2 - 1% of 2500 * 2 = 450 = 18% oil

7% of 2500 is 1% of 2500 = 25 * 7 = 175 = 7% oil.

875-175 = 700

700 divided by total investment possibilities (2500) = 7 / 25

You don't have to do any calculations. The data is given in percentages and you are asked the probability. You don't need any concrete numbers i.e. you don't need to use 2500. Check the solutions given above.
_________________

Re: Among a group of 2,500 people, 35 percent invest in muni.... [#permalink]

Show Tags

10 Dec 2012, 20:02

VeritasPrepKarishma wrote:

AlyoshaKaramazov wrote:

This problem can be handled by a straightforward matrix, the only thing that is semi-difficult is the calculations, but some handy multiplication tricks borrowed from some case interviewing skills help.

35% of 2500 is: 10% of 2500 = 250 * 3 = 750 + 1/2 of 250 = 875. 35% MB

18% of 2500 is 10% of 2500 = 250 * 2 - 1% of 2500 * 2 = 450 = 18% oil

7% of 2500 is 1% of 2500 = 25 * 7 = 175 = 7% oil.

875-175 = 700

700 divided by total investment possibilities (2500) = 7 / 25

You don't have to do any calculations. The data is given in percentages and you are asked the probability. You don't need any concrete numbers i.e. you don't need to use 2500. Check the solutions given above.

yours is definitely more elegant, no question. just another way to skin the cat, I suppose.

Its been long time coming. I have always been passionate about poetry. It’s my way of expressing my feelings and emotions. And i feel a person can convey...

Written by Scottish historian Niall Ferguson , the book is subtitled “A Financial History of the World”. There is also a long documentary of the same name that the...

Post-MBA I became very intrigued by how senior leaders navigated their career progression. It was also at this time that I realized I learned nothing about this during my...