CFA Practice Question

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CFA Practice Question

For a data collection, if a score has a z-score of 1.5, then ______

A. the score is 1.5 standard deviations above the mean.
B. the score is better than 15% of the scores in the data collection.
C. the score is 1.5 standard deviations below the mean.
Correct Answer: A

A z-score provides the number of standard deviations an x-score is above or below the mean. A z-score of 1.5 informs you that the piece of data is 1.5 standard deviations above the mean.

User Contributed Comments 5

User Comment
StanleyMo so when it change to -1.5 then it will be below the mean.
TammTamm That's what I think stanleymo. Hopefully that's correct.
tschorsch z = (value - mean) / stddev

positive zs are above the mean
negative zs are below the mean

you can either remember the meaning and derive the equation or remember the equation and derive the meaning

if you can remember both, you will have redundant knowledge that will save time and prevent errors

if you need to remember one, the meaning is usually more useful since it will allow you to answer non calculated questions without having to understand the meaning from the equation.
gbose Z = 1.5 = (X - Mean) / SD
=> X = 1.5 SD + Mean
i.e. Score is 1.5 Standard Deviation above the mean
akils if the score was -1.5, the answer would have been C.
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