curriculum june 2012 quantitative methods, reading 10 sampling and estimation, page 580 of curriculum im unable to comprehend practice problem no.10 . if anyone could possibly explain the solution… thank you
I’ve curriculum June 2011 . Please mention the question here, it would be easier to answer…
an exchange rate has a given expected future value and standard deviation. A. assuming that the exchange rate is normally distributed, what are the probabilities that the exchange rate will be at least 2 or 3 standard deviations away from its mean? B part is about chebyshev’s inequality. but im sure, if any one could possibly explain the A part, i will get the B. thank you
The Z table values for “2” and “3” under the zero column are 0.9772 and 0.9987. Since this question is asking about “at least” 2 or 3 standard deviations, you’re looking for the area under the tails on either side of the mean. Which means one minus the area under the curve, times two. So for 2 standard deviations, the area under the curve based on the Z table value is 0.9772. Which implies area under the tail is (1 - 0.9772) = 0.0228. Ultimately, area under the both the tails, because the normal distribution is symmetrical, is (2 * 0.0228) = 0.0456. Hope this helps.
thank you oyster, you are awesome. now it makes perfect sense… thank you belaal for directing me how to ask the question…