So there’s a minor thing that I can’t get. Nothing difficult though, just confusing _______________________________________________________ Annual EPS are normally distributed with a mean = 6 and st.dev.=2. The probability of value falling btw 2 and 8? 1) standardizing to the normal distribution: 8 --> z=+1 --> one st.dev. above the mean {z=(8-6)/2} 2 --> z=-2 --> two st.dev. below the mean 68% interval - +/- 1 st.dev., 95% - +/- two st.dev. of the mean. Since the mean of the normal distribution is zero, we can approximate the probability of the EPS falling between 2 and 8 as 0.68/2 + 0.95/2 = 0.815, or P(2<=EPS<=8) _________________________________________________________ Why do we divide 0.68 by 2 and not by 1 (68% - 1 st.dev.)?
the reason being you are finding the probability between mean and 1 and mean and -2 which are half of -2 to 2 and -1 to 1.