Hi Monica,
You would subtract 175 from 875 because 175 is already included in the 875.
The question states that 35% of 2500 invests in Municipal Bonds, out of these people some could be investing in both the bonds. The question wants you to find out the probability of people investing in the Municipal Bond only and this 35% includes people who are investing in both, the Municipal as well as the oil stock. As we are also given the number of people who invest in both the Bonds i.e. 175 , we would subtract it from 875 and find out the probability of people who invest in the Municipal Bond only.
