Question

Information about mutual funds provided by Morningstar Investment Research includes the type of mutual fund (Domestic Equity, International Equity, or Fixed Income) and the Morningstar rating for the fund. The rating is expressed from 1-star (lowest rating) to 5-star (highest rating). A sample of 25 mutual funds was selected from Morningstar Funds 500 (2008). The following counts were obtained:
Sixteen mutual funds were Domestic Equity funds.
Thirteen mutual funds were rated 3-star or less.
Seven of the Domestic Equity funds were rated 4-star.
Two of the Domestic Equity funds were rated 5-star.
Assume that one of these 25 mutual funds will be randomly selected in order to learn more about the mutual fund and its investment strategy.
a. What is the probability of selecting a Domestic Equity fund?
b. What is the probability of selecting a fund with a 4-star or 5-star rating?
c. What is the probability of selecting a fund that is both a Domestic Equity fund and a fund with a 4-star or 5-star rating?
d. What is the probability of selecting a fund that is a Domestic Equity fund or a fund with a 4-star or 5-star rating?



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  • CreatedFebruary 16, 2015
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