Page 58 - FINAL CFA I SLIDES JUNE 2019 DAY 3
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LOS 10.l: Define the standard normal distribution, Session Unit 3:
explain how to standardize a random variable, and
calculate and interpret probabilities using the 10. Common Probability Distributions
standard normal distribution.
Calculating Probabilities Using z-Values, p. 229
Example: Using the z-table (2): Using the distribution of EPS with μ = $6 and σ = $2 again, what percent of the observed
EPS values are likely to be less than $4.10?
P(EPS < $4.10).
That is, $4.10 is 0.95 SDs below the mean of $6.00.
Step 2 –use table to find z:
F(Z) = (F–0.95) = 0.1711, or 17.11%.
And p that EPS will be more than $4.10?
Read from + z table or subtract from 1 to get 82.89%
