Official Guide Explanation:
Problem Solving #D04




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Solution and Metadata

Question: D04
Page: 20
Difficulty: 6 (Moderately Difficult)
Category 1: Arithmetic > Sets > 2 sets
Category 2: Arithmetic > Percents > other
Category 3: Word Problems > Sets >

Explanation: This is a classic overlapping sets problem. Don't waste your time by figuring out what absolute numbers the percentages correspond to. Since the question is asking for a probability, the fact that there are 2,500 people in the group is irrelevent.

We're looking for the fraction of people who invest in municipal bonds but not in oil stocks. We know that 35 percent of the group invests in municipal bonds. 7 percent of the group invests in both municipal bonds and oil stocks, meaning that 28 percent of the group (35 - 7) invests in municipal bonds, but not in oil stocks.

Thus, the probability is (28/100) = (14/50) = (7/25), choice (B).

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