- CFA Exams
- Forums
- Study Lounge
- Topic: doubt on NORMAL CURVE

Author | Topic: doubt on NORMAL CURVE |
---|---|

doubtful@2010-05-01 11:19:21 |
I am trying to learn Normal Curve:
Can someone tell me what do X and Y axis of this horrible curve stand for? What I understand is that it shows distribution of some data, but when the same is mixed with probablity concept I am lost. |

rachel@2010-05-14 08:32:44 |
Do not concern yourself with what the coordinates X and Y represent. Understand what the shape of the curve represents.
A normal curve has the following characteristics: 1 - Bell shaped - shaped identically on both sides with no outliers 2 - The graph is drawn on either side of the mean of all the observations making up the curve 3 - 68% of the observations lie within + or - one standard deviation of the mean. This means 34% (68/2) of observations lie one standard deviation to the left (below) of the mean and 34% of the observations lie to the right (above) of the mean. It is just an accepted convention. |

guest@2010-05-21 14:30:49 |
I think you are confusing about how to convert a distribution to a density curve. Think about a simple example: a class has 40 students, the grades are following: Grade number of people relative frequency C- 1 2.5% C 5 12.5% B 28 70% A- 5 12.5% A 1 2.5% You can use grade as x axis and number of people as y axis to form a hisgram graph which has a bell shape, if you smooth out the edges. The same bell shape can describe the relative frequency as well, therefore it becomes a density curve. Total relative frequency adds up to 1, so the area under the bell shape line is 1. After the transformation, y axis is not important any more. You also can denote x axis as mean value in the middle and number of standard deviation above or under mean. Hope this helps |

### CFA Discussion Topic: doubt on NORMAL CURVE

I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.