- CFA Exams
- CFA Exam: Level I 2021
- Study Session 2. Quantitative Methods (1)
- Reading 7. Statistical Concepts and Market Returns
- Subject 6. Measures of Dispersion

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**CFA Practice Question**

What percent of the observations of a normal distribution will lie above the mean plus two standard deviations?

B. 5%

C. 95%

A. 2.5%

B. 5%

C. 95%

Correct Answer: A

95% of the observations lie between plus and minus two standard deviations from the mean. Therefore, 2.5% lie above two standard deviations on each side of the mean.

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**User Contributed Comments**
11

User |
Comment |
---|---|

Pooh |
This reminds me to read question carefully. |

ENDER |
Me too:)) |

Rotigga |
Good question. |

melodyliu |
trick question. So the answer 2.5% looks like unreasonable, but that's the right anwer |

coolnan |
very tricky |

TammTamm |
Me too because I just knew it was 95%. Wow, the mistakes will really hurt if you don't read the question correctly the first time. |

duongth307 |
Hic hic, me three :)) |

udhay |
But as per Chebyshev's inequality formula the proportion of observation with in 2 standard deviation of mean is 75, then how come this answer is correct |

loisliu88 |
the chebyshev's inequality states that AT LEAST 75% of the observations lie within 2 standard deviation, but it doesn't give a max value. And for a normal distribution like this one, 95% of the observations lie within 2 standard deviations. |

yesandy11 |
That's why this site is so good. It trains you to look for questions like this. |

msk500 |
If 95% of the observations lie within 2 SD away from the mean, then 5% of the observations lie away from 2 SD. As this is a normal distribution, 2.5% of the 5% of observations will lie to the right (+), and 2.5% to left (-). |