- CFA Exams
- CFA Level I Exam
- Study Session 3. Quantitative Methods (2)
- Reading 9. Common Probability Distributions
- Subject 8. The Standard Normal Distribution

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**CFA Practice Question**

An analyst determines that approximately 99% of the observations of daily sales for a company are within the interval from $230,000 to $480,000 and that daily sales for the company are normally distributed. The standard deviation of daily sales (in $) for the company is closest to ______.

A. 41,667

B. 62,500

C. 83,333

**Explanation:**Given that sales are normally distributed, the mean is centered in the interval.

Mean = ($230,000 + 480,000) / 2 = $355,000. 99% of observations under a normal distribution will be plus/minus three standard deviations. Thus, ($355,000 - $230,000)/3.0 = $41,667. It is also the case that ($480,000 - $355,000)/3.0 = $41,667.

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**User Contributed Comments**
5

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

Haag |
99% of observations under a normal distribution should be plus/minus 2.58 standard deviations? |

droko |
That's Chebyshe's theory. a rough estimate. |

wilsonesou |
extremely rough |

Lambo83 |
It's nothing to with Chebyshev. Use Chebyshev when it is not known it's normal dist. Anyways 3 std. dev with Chebyshev is 89% |

lquiroz92 |
since it is a normal distribution it would be 2.58 |