The Infinite Actuary Exam 1/P Online Seminar

A.1. Fundamentals of Probability Solutions

Last updated November 23, 2015

1. An analysis of an insurance companys policyholders finds the following:

(i) Twice as many policyholders buy auto insurance as buy home insurance
(ii) 70% of policyholders buy either auto insurance or home insurance
(iii) 20% of policyholders buy both auto insurance and home insurance

What fraction of policyholders buy home insurance but not auto insurance?

A. 10.0% B. 20.0% C. 23.3% D. 25.0% E. 30.0%

Let A be those buying auto insurance and H those who buy homeowners insurance. Then
P[A] = 2P[H]
0.7 = P[A H] = P[A] + P[H] P[AH]
0.7 = 2P[H] + P[H] 0.2
P[H] = 0.3
P[HA0 ] = P[H] P[AH] = 0.3 0.2 = 0.1

A H

0.4 0.2 0.1

The Venn diagram is

2. Suppose that 40% of customers buy fire insurance, 30% buy theft insurance, and 20% buy both fire and
theft insurance. How many buy either fire insurance or theft insurance, but not both?

A. 10% B. 20% C. 30% D. 40% E. 50%

Let F be those who buy fire insurance and T those who buy theft insurance. We want
P[F T ] P[F T ] = (P[F ] + P[T ] P[F T ]) P[F T ]
= 0.4 + 0.3 0.2 0.2
= 0.3

F T

0.2 0.2 0.1

The Venn diagram is

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3. You are given that P[A B 0 ] = 0.3 and P[(A B)0 ] = 0.4. What is P[B]?

A. 0.2 B. 0.3 C. 0.5 D. 0.6 E. 0.7

(A B)0 = A0 B 0 , so we have 0.3 = P[AB 0 ] and 0.4 = P[A0 B 0 ]. Adding gives us 0.7 = P[B 0 ], and thus
P[B] = 1 0.7 = 0.3

A B

0.3

0.4

4. [SOA 2; S00.01] The probability that a visit to a primary care physicians (PCP) office results in neither
lab work nor referral to a specialist is 35%. Of those coming to a PCPs office, 30% are referred to
specialists and 40% require lab work. Determine the probability that a visit to a PCPs office results in
both lab work and referral to a specialist.

A. 0.05 B. 0.12 C. 0.18 D. 0.25 E. 0.35

Let L denote the event that the trip requires lab work, and S the event that it results in a referral to a
specialist. We are given:

P[(L S)0 ] = 0.35 P[L S] = 1 0.35 = 0.65

P[S] = 0.30 P[L] = 0.40

and we want P[L S]

P[L S] = P[L] + P[S] P[L S]

0.65 = 0.40 + 0.30 P[L S]
P[L S] = 0.05

5. [SOA 3; S01.12] You are given P[A B] = 0.7 and P[A B 0 ] = 0.9.

Determine P[A].

A. 0.2 B. 0.3 C. 0.4 D. 0.6 E. 0.8

We are given 0.7 = P[AB] = P[A]+P[B]P[AB] and 0.9 = P[AB 0 ] = P[A]+P[B 0 ]P[AB 0 ]. Summing

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gives us 1.6 = 2P [A]+P [B]+P [B 0 ](P[AB]+P[AB 0 ]). But P[B]+P[B 0 ] = 1 and P[AB]+P[AB 0 ] = P[A],
so the right hand side is P[A] + 1. Subtracting 1 gives us P[A] = 0.6 .

Or, 0.7 = P[A B] so 1 0.7 = 0.3 = P[A0 B 0 ], and P[A B 0 ] = 0.9 so 1 0.9 = 0.1 = P[A0 B]. Adding
those gives us 0.4 = P[A0 ] and P[A] = 1 0.4 = 0.6 This method is easier to follow if you draw the Venn

A B

0.1

0.3
diagram:

6. [SOA 8; F01.09] Among a large group of patients recovering from shoulder injuries, it is found that 22%
visit both a physical therapist and a chiropractor, whereas 12% visit neither of these. The probability that
a patient visits a chiropractor exceeds by 0.14 the probability that a patient visits a physical therapist.
Determine the probability that a randomly chosen member of this group visits a physical therapist.

A. 0.26 B. 0.38 C. 0.40 D. 0.48 E. 0.62

Let T denote the event that a patient visits a physical therapist, and C the event that a patient visits a
chiropractor. We are given:

P[T C] = 0.22
P[(T C)0 ] = 0.12 P[T C] = 1 0.12 = 0.88
P[C] = 0.14 + P[T ]

and we want P[T ]

P[T C] = P[C] + P[T ] P[T C]

0.88 = 0.14 + P[T ] + P[T ] 0.22
P[T ] = 0.48

7. [Course 110; F86.11] Let P[A B] = 0.2, P[A] = 0.6 and P[B] = 0.5. Find P[A0 B 0 ].

A. 0.1 B. 0.3 C. 0.7 D. 0.8 E. 0.9

A0 B 0 means that it is either not in A or not in B, which includes everything except AB (i.e.,
A0 B 0 = (A B)0 ), so P[A0 B 0 ] = 1 P[AB] = 1 0.2 = 0.8

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8. 75% of students who graduated from high school in 2006 took the SAT, and 40% of 2006 high school
graduates took the ACT. If 30% of students who graduated from high school in 2006 took both the ACT
and the SAT, how many took one test but not the other?

A. 45% B. 55% C. 65% D. 75% E. 85%

Let S be the event that a student took the SAT and A the event that a student took the ACT. We know
P[AS] = 0.3 and P[S] = 0.75, so P[A0 S] = 0.75 0.3 = 0.45 and P[AS 0 ] = 0.4 0.3 = 0.1. Combining
these gives us 0.45 + 0.10 = 0.55

9. [SOA 1; S03.01] A survey of a groups viewing habits over the last year revealed the following information:

(i) 28% watched gymnastics

(ii) 29% watched baseball
(iii) 19% watched soccer
(iv) 14% watched gymnastics and baseball
(v) 12% watched baseball and soccer
(vi) 10% watched gymnastics and soccer
(vii) 8% watched all three sports.

Calculate the percentage of the group that watched none of the three sports during the last year.

A. 24 B. 36 C. 41 D. 52 E. 60

G .14 .08 B
.12 .11
= 0.06

.02 .08 .04

.19 .14 = .05

S

We want the probability that someone watches none of these sports, so we want

1 0.12 0.06 0.11 0.02 0.08 0.04 0.05 = 0.52

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10. [SOA 5; F00.03] An auto insurance company has 10,000 policyholders. Each policyholder is classified as

(i) young or old;

(ii) male or female; and
(iii) married or single

Of these policyholders, 3,000 are young, 4,600 are male, and 7,000 are married. The policyholders can
also be classified as 1,320 young males, 3,010 married males, and 1,400 young married persons. Finally,
600 of the policyholders are young married males.

How many of the companys policyholders are young, female, and single?

A. 280 B. 423 C. 486 D. 880 E. 896

There are 3,000 young policy holders. 1,320 are male, leaving 1,680 young female policy holders. There
are 1,400 young married policyholders, 600 of whom are male, so there are 800 young female married
policyholders, leaving 1,680 800 = 880 young female single policyholders.

11. [SOA 128] An insurance agent offers his clients auto insurance, homeowners insurance and renters insur-
ance. The purchase of homeowners insurance and the purchase of renters insurance are mutually exclusive.
The profile of the agents clients is as follows:

(i) 17% of the clients have none of these three products.

(ii) 64% of the clients have auto insurance.
(iii) Twice as many of the clients have homeowners insurance as have renters insurance.
(iv) 35% of the clients have two of these three products.
(v) 11% of the clients have homeowners insurance, but not auto insurance.

Calculate the percentage of the agents clients that have both auto and renters insurance.

A. 7% B. 10% C. 16% D. 25% E. 28%

Using the fact that R and H are mutually exclusive, and then given properties (i), (iv), (v) and (ii) gives
the following Venn diagram:

A
H
0.35 x 0.11 1 = 0.35 x + 0.11 + 0.29 + x + y + 0.17
1 = 0.92 + y, 0.08 = y
0.29 0.17
2(x + y) = 0.46 x by given (iii)
x y 2x + 0.16 = 0.46 x

R x = 0.10

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12. [SOA 134] A mattress store sells only king, queen and twin-size mattresses. Sales records at the store
indicate that one-fourth as many queen-size mattresses are sold as king and twin-size mattresses combined.
Records also indicate that three times as many king-size mattresses are sold as twin-size mattresses.

Calculate the probability that the next mattress sold is either king or queen-size.

A. 0.12 B. 0.15 C. 0.80 D. 0.85 E. 0.95

P[K] = 3P[T ]
1
P[Q] = (P[K] + P[T ])
4
1
= (3P[T ] + P[T ]) = P[T ]
4
1 = P[K] + P[Q] + P[T ]
= 3P[T ] + P[T ] + P[T ]
P[T ] = 0.2
P[K Q] = P[K] + P[Q] = 4P[T ] = 0.80

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13. [SOA 146] A survey of 100 TV watchers revealed that over the last year:

(i) 34 watched CBS.

(ii) 15 watched NBC.
(iii) 10 watched ABC.
(iv) 7 watched CBS and NBC.
(v) 6 watched CBS and ABC.
(vi) 5 watched NBC and ABC.
(vii) 4 watched CBS, NBC, and ABC.
(viii) 18 watched HGTV and of these, none watched CBS, NBC, or ABC.

Calculate how many of the 100 TV watchers did not watch any of the four channels (CBS, NBC, ABC
or HGTV).

A. 1 B. 37 C. 45 D. 55 E. 82

C
N
25 3 7

2 4 1

3
A

18 H
The Venn diagram we get is

Subtracting the pieces we have solved for from 100 gives

100 25 3 7 2 4 1 3 18 = 37

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14. There are three major newspapers in the city of Crobuzon: the Globe, the Herald, and the Phoenix.
The Phoenix is distributed freely, but the Globe and Herald cost money. On a recent day, sales of the
newspapers were as follows:

(i) 25% of people didnt read any newspaper

(ii) 25% of people read the Globe and 29% read the Herald
(iii) 40% of people read the Phoenix
(iv) 9% of people read both the Globe and the Herald
(v) 3% of people read all 3 papers

What percentage of people read the Phoenix and also read exactly one of the other two papers?

A. 0.03 B. 0.07 C. 0.10 D. 0.13 E. 0.16

Let G denote those who read the Globe, H those who read the Herald, and P those who read the Phoenix.
G H
.25 .09 x 0.06 .29 .09 y

x 0.03 y

.4 .03 x y
0.25 P

We want x + y, and using that everything sums to 1 gives

1 = (0.25 0.09 x) + x + 0.06 + 0.03 + (0.29 0.09 y) + y

+ 0.25 + (0.4 0.03 x y)
= 1.07 x y
x + y = 0.07

15. If P[A] = 0.7 and P[B] = 0.6, what is the minimum possible value of P[A B]?

A. 0.3 B. 0.4 C. 0.5 D. 0.6 E. 0.7

In general, all we know about probabilities is that they can range from 0 to 1. To get restrictions on
P[A B] we want an equation that combines P[A B], along with the things that we know, namely P[A]
and P[B], and gives us a probability. In particular, we can say that

0 P[A B] 1
P[A B] = P[A] + P[B] P[AB]
0 0.7 + 0.6 P[AB] 1
1.3 P[AB] 0.3

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 1.3 P[AB] 0.3

That gives us a useful lower bound of P[AB] 0.3

Note that this bound can be obtained if P[AB] = 0.3, P[AB 0 ] = 0.4, P[A0 B] = 0.3 and P[A0 B 0 ] = 0.

16. If P[A] = 0.7 and P[B] = 0.6, what is the maximum possible value of P[A B]?

A. 0.3 B. 0.4 C. 0.5 D. 0.6 E. 0.7

The problem with the approach we used in the previous problem is that it gave the upper bound of
P[AB] 1.3, which we already knew since it is a probability and hence no more than 1. But we also
know that AB A and AB B so P[AB] P[A] and P[AB] P[B]. That gives us P[AB] 0.6 and
P[AB] 0.7. Taking the most restrictive of those gives us the maximum possible value of P[AB] of 0.6

This upper bound can be realized if B A.

17. A toy company manufactures three different types of toys: cars, trains, and spaceships. If the number of
cars that they make is twice the number of trains, and the number of spaceships is twice the number of
cars and trains combined, what is the probability that a randomly selected toy is a car?

A. 1/9 B. 1/7 C. 2/9 D. 2/7 E. 4/7

Let C, T and S denote the event of being a car, train, and spaceship respectively. We are told P[C] =
2P[T ], so P[T ] = (0.5)P[C]. Likewise, P[S] = 2(P[C] + P[T ]) = 2(1 + 0.5)P[C] = 3P[C]. Since the total
probability is 1, and these events are disjoint, we have 1 = P[T ] + P[C] + P[S] = 4.5P[C], so P[C] = 2/9

18. An integer is randomly chosen from {1, 2, 3, . . . , 25}. What is the probability that it is even or divisible
by 5, but not both?

A. 10/25 B. 12/25 C. 13/25 D. 15/25 E. 17/25

You could do it by explicitly listing all the possibilities. Alternatively, there are 5 numbers in the set that
are divisible by 5, 12 that are even, and 2 (10 and 20) that are both, so P[even] = 12/25, P[divisible by 5] =
5/25 and P[both] = 2/25, so P[even or divisible by 5, but not both] = (12 + 5 2 2)/25 = 13/25

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19. [SOA/CAS 1999 Practice Exam #1] A marketing survey indicates that 60% of the population owns an
automobile, 30% owns a house, and 20% owns both an automobile and a house.

Calculate the probability that a person chosen at random owns an automobile or a house, but not both.

A. 0.4 B. 0.5 C. 0.6 D. 0.7 E. 0.9

Let A denote those who own an automobile and H those who own a house. Then P[A] = 0.6, P[H] = 0.3,
and P[AH] = 0.2. We want P[A H] P[AH] = (0.6 + 0.3 0.2) 0.2 = 0.5

20. Suppose that A and B are mutually exclusive events, and C and D are also mutually exclusive events. If
P[A] + P[B] = .7, P[C] + P[D] = .6 and P[A B C D] = .9, what is the probability that exactly one
of the four events occurs?

A. 0.3 B. 0.4 C. 0.5 D. 0.8 E. 0.9

C D

P[A] + P[B] + P[C] + P[D] = P[A B C D] + P[AD] + P[AC] + P[BC] + P[BD]

0.7 + 0.6 = 0.9 + P[AD] + P[AC] + P[BC] + P[BD]
0.4 = P[AD] + P[AC] + P[BC] + P[BD]
P[exactly 1 of the 4 events] = 0.9 0.4 = 0.5

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21. A high school offers language classes in French, German, Latin, and Spanish. Suppose that

(i) Twice as many students take Spanish as German, and twice as many take German as Latin.
(ii) The same number of students take French as who take German
(iii) French and German are taught at the same time, so no one takes both. Likewise, no one takes both
Latin and Spanish.
(iv) The number of students who only take German is twice as many as the number who only take Latin
(v) The number of students who take both Spanish and French is twice the number who take both
Latin and French.
(vi) The number who take both French and Latin is the same as the number who take both German
and Latin
(vii) The number who take both German and Spanish is the same as the total number who take Latin

If all 160 students at the school take a language class, what is the probability that a randomly selected
student studies more than one language?

A. 0.35 B. 0.44 C. 0.50 D. 0.56 E. 0.65

F G

L x y x

3y 2y

S 2x 2x + 5y 2x + y

From (iii), we know that L and S are disjoint, hence they are non-overlapping sets in our Venn diagram.
Likewise, F and G are also disjoint.

From (v) and (vi), let x be the number who take French and Latin, so 2x is the number who take Spanish
and French and x is the number who take German and Latin.

Let y be the number who take Latin only. (iv) tells us that the number who take German only is 2y, and
(vii) tells us that the total number who take German and Spanish equals the number who take Latin,
which is 2x + y from our diagram.

We now see that 3x + 3y take German, so from (ii), we also have 3x + 3y who take French. 3x take French
plus another language, so 3y take French only. The number who take Spanish is 2(x+2y+2x+y) = 6x+6y,
so 6x + 6y 2x (2x + y) = 2x + 5y take Spanish only.

Finally, twice as many take German as Latin, so 2(2x + y) = (3x + 3y) and so x = y. There are 20x who
take at least one language, and 7x who take more than 1, so P[more than 1 language] = 7x/(20x) = 0.35

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22. An insurance company offers four types of coverage: fire, tornado, flood, and earthquakes. What percent-
age of its policyholders have only tornado coverage if you are given the following:

(i) No policyholders have three or more types of coverage, and no one has both tornado and earthquake
coverage
(ii) 53% of the policyholders only have one type of coverage
(iii) Twice as many people have only fire insurance as have only tornado insurance
(iv) The same number of people have both flood and tornado insurance as have both flood and earthquake
insurance
(v) Twice as many people have both fire and tornado insurance as have both fire and earthquake
insurance
(vi) Twice as many people have flood only as have both fire and flood
(vii) 35% of the policyholders have fire insurance
(viii) 35% of the policyholders have earthquake insurance
(ix) 5% of the policyholders have both fire and flood insurance

A. 0.04 B. 0.09 C. 0.15 D. 0.16 E. 0.18

F ire F lood

T 2z x y

2x .05 0.1

E z w y

From (i), we can draw T and E as disjoint, but need to keep some overlap between Fire and Flood.
Since no one has 3 coverages, that overlap is outside of both T and E, hence the basic shape of our Venn
diagram.

Let x be T only, so 2x is fire only by (iii). Let y be flood and T , so flood and E is also y (by iv). Let z
be fire and E, so 2z is fire and T by (v). Finally, 0.35 = P[E] so P[E only] = w = 0.35 y z

We can then get the system of equations

0.53 = 2x + x + 0.1 + 0.35 y z, 0.08 = 3x y z

0.35 = 2z + 2x + z + 0.05, 0.30 = 3z + 2x
1 = 3x + 2z + y + 0.5, 0.50 = 3x + y + 2z

from (ii), (vii), and the fact that all the probabilities sum to 1. Solving gives x = 0.09

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23. [Course 110; S90.23] Which of the following events is identical to (B C) (A0 B C 0 )?

(i) B (A0 C)
(ii) (A0 B) (B C)
(iii) (A0 C 0 ) (B C)

A. (i) and (ii) only

B. (i) and (iii) only
C. (ii) and (iii) only
D. all 3
E. None of these are identical

One approach is to draw a Venn diagram for each combination and compare. It turns out that the (i)
and (ii) are the same as the original expression, so the answer is A and the Venn diagram for those is

A B

Expression (iii) is different since it also includes everything outside of A B C.

24. [Course 110; W96.23] Let A and B be events such that P(A) = 0.7 and P(B) = 0.9. Calculate the largest
possible value of P(A B) P(A B).

A. 0.20 B. 0.34 C. 0.40 D. 0.60 E. 1.60

P[A B] P[A B] = (P[A] + P[B] P[AB]) P[AB] = 1.6 2P[AB] so it is maximized when P[AB] is
minimized. Since 1 P[A B] = P[A] + P[B] P[AB] = 1.6 P[AB], we have P[AB] 0.6 and so the
minimum of our quantity is 1.6 2 0.6 = 0.4

25. Two fair dice are rolled. What is the probability that either the sum is 8 or that at least one of the dice
comes up a 6?

A. 9/36 B. 11/36 C. 14/36 D. 15/36 E. 16/36

One approach to problems like this is to let one die be red, one blue (so we can tell them apart), list all
36 cases, and count.

Using our probability rules, there are 11 ways to get at least one 6, and 3 ways to roll an 8 without a 6
(red 3 and blue 5, or both 4, or red 5 and blue 3). Since those are disjoint, we can sum the probabilities
for a final answer of (11/36) + (3/36) = 14/36 .

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26. Suppose that A, B, and C are events such that

(i) P[A] = 0.6, P[B] = 0.5 = P[C]

(ii) P[AB] = 0.3 = P[AC] but P[BC = 0.2]
(iii) P[ABC] = 0.1

Find P[A B C]

A. 0.6 B. 0.7 C. 0.8 D. 0.9 E. 1.0

A 0.3 0.1 B
0.1 0.1
= 0.2

0.2 0.1 0.1

0.1
C

From the Venn diagram, we see the answer is 0.9

27. Suppose that A, B, and C are events such that

(i) P[A] = 0.6, P[B] = 0.5 = P[C]

(ii) P[AB] = 0.3 = P[AC] but P[BC = 0.2]
(iii) P[ABC] = 0.1

Find P[A0 B 0 C]

A. 0.0 B. 0.1 C. 0.2 D. 0.3 E. 0.4

A 0.3 0.1 B
0.1 0.1
= 0.2

0.2 0.1 0.1

0.1
C

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