Page 94 - FINAL CFA SLIDES DECEMBER 2018 DAY 3

LOS 10.l: Define the standard normal
distribution, explain how to standardize a Session Unit 3:
10. Common Probability Distributions (C/C/C)
random variable, and calculate and

interpret probabilities using the standard Calculating Probabilities Using z-Values
normal distribution.

Use the following data to answer Questions 16 through 18. A study of hedge fund

investors found that their annual household incomes are normally distributed with a
mean of $175,000 and a standard deviation of $25,000.

C. z = (100 – 175) / 25 = –3, F(–3) = 1 – 0.9987 = 0.0013

C. 1 – F(2), where F(2) equals 0.9772. Hence, 1 – 0.9772 = 0.0228.

C. 84.13%