Question

a financial analyst is preparing a spreadsheet to analyze the investment patterns of clients based on their age groups. the analyst has raw data for two age groups and the types of investments they chose: stocks or bonds. the data is as follows:

• 30 clients under 40 years old invested in stocks.
• 20 clients under 40 years old invested in bonds.
• 40 clients 40 years or older invested in stocks.
• the total number of clients 40 years or older is 100.

if the financial analyst wants to understand the preference for bonds among clients 40 years or older, what is the conditional relative frequency of clients 40 years or older who invested in bonds given that they are from this age group?

Explanation:

Step1: Find the number of clients 40 or older who invested in bonds

Total clients 40 or older = 100. Clients 40 or older who invested in stocks = 40. So, clients 40 or older who invested in bonds = \(100 - 40=60\)

Step2: Calculate the conditional relative frequency

Conditional relative frequency formula: \(\text{Conditional Relative Frequency}=\frac{\text{Number of favorable cases}}{\text{Total number of cases in the given group}}\)
Here, number of favorable cases (clients 40 or older who invested in bonds) = 60, total number of cases in the given group (clients 40 or older) = 100. So, \(\text{Conditional Relative Frequency}=\frac{60}{100}=0.6\)

Answer:

0.6