I am not able to understand why is a normal probability plot straight line? Could any of you clarify how is it different from a Normal Distribution (bell shaped)? Many thanks.

its the prob that any outcome will occur. The normal prob plot implies that all outcomes are equally likely. Therefore if there are 100 trials and 10 different outcomes, the normal prob plot will be a straigh line horizontal to the x axis at y=10.

The normal probability plot is a graphical technique for assessing whether or not a data set is approximately normally distributed. The data are plotted against a theoretical normal distribution in such a way that the points should form an approximate straight line. Departures from this straight line indicate departures from normality. from http://en.wikipedia.org/wiki/Normal_probability_plot

Great explanation, thanks a lot. Another question for today: Assume that the flow of information is constant and that returns are independent of one another. By what amount should the covariance term be inflated to adjust for nonsynchronous data between the New York Stock Exchange and the London Stock Exchange if there is a 6-hour lag between the market closing times? A) 2.66. B) 3.00. C) 6.00. D) 1.33.

MBA homework?

anupamjain008 Wrote: ------------------------------------------------------- > Great explanation, thanks a lot. > > Another question for today: > > Assume that the flow of information is constant > and that returns are independent of one another. > By what amount should the covariance term be > inflated to adjust for nonsynchronous data between > the New York Stock Exchange and the London Stock > Exchange if there is a 6-hour lag between the > market closing times? > > A) 2.66. > > B) 3.00. > > C) 6.00. > > D) 1.33. dude, new thread for new question. and i dont mind mba homework as long as it has a overlap with CFA LOSs.