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