# Answer on Statistics and Probability Question for muthe

Question #5176

An investment manager has all her bonds divided in three portfolios: P1, P2 and P3. The rst

portfolio (P1) collects the 20 percent of the bonds, the second (P2) 50 percent, and the third one (P3)

the remaining 30 percent. However, 5 percent of the bonds in the rst portfolio are defaulted, 2 percent

in the second are defaulted and, nally, the percentage of defaulted bonds in the third portfolio is 10

percent. If you buy one bond from the above manager, and it turns out to be defaulted, what is the

probability that it belongs to the rst portfolio P1? And what is the probability that belongs to any

of the other two portfolios (P2 and P3)?

portfolio (P1) collects the 20 percent of the bonds, the second (P2) 50 percent, and the third one (P3)

the remaining 30 percent. However, 5 percent of the bonds in the rst portfolio are defaulted, 2 percent

in the second are defaulted and, nally, the percentage of defaulted bonds in the third portfolio is 10

percent. If you buy one bond from the above manager, and it turns out to be defaulted, what is the

probability that it belongs to the rst portfolio P1? And what is the probability that belongs to any

of the other two portfolios (P2 and P3)?

Expert's answer

1-20per

2-50per

3-30per

5% *20%=1%& of all bonds are defaulted in 1st portfolio

2%*50%=1%& of all bonds are defaulted in 2d portfolio

10%*30%=3%& of all bonds are defaulted in 3rd portfolio

P(a=1st|a-is defaulted)= 1/(1+1+3)=1/5

P(a=2 or 3rd |a-is defaulted)=1-1/5=4/5

2-50per

3-30per

5% *20%=1%& of all bonds are defaulted in 1st portfolio

2%*50%=1%& of all bonds are defaulted in 2d portfolio

10%*30%=3%& of all bonds are defaulted in 3rd portfolio

P(a=1st|a-is defaulted)= 1/(1+1+3)=1/5

P(a=2 or 3rd |a-is defaulted)=1-1/5=4/5

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