CFA L1 Quants quiz 4

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CFA L1 Quants quiz 4

Postby vishnu.ftw » Tue Apr 30, 2013 7:26 pm

A normal distribution has a mean of 39 and a variance of 625. The area under the distribution between 50 and 75 equals ________.
Choose one answer.
a. 0.745
b. 0.319
c. 0.255
The correct answer is 0.255.

First note that the area between two numbers under a probability distribution is the same as the probability of getting a number between those two numbers. The standard deviation of the distribution equals sqrt(625) = 25. The z-value of 50 equals (50-39)/25 = 0.44. The z-value of 75 equals (75-39)/25 = 1.44. Using the Normal probability tables, we get P(z < 0.44) = 0.67 and P(z < 1.44) = 0.9251. The area between 50 and 75 is then given by P(0.44 < z < 1.44) = P(z < 1.44) - P(z < 0.44) = 0.9251 - 0.67 = 0.255.
Marks for this submission: 0/1.

do we get z-value in the exam, or a z-table?

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CFA L1 Quants quiz 4

Postby lokesh1 » Wed May 01, 2013 11:50 pm

Hey Vishnu

You are supposed to memorize the z-values that would be used to create confidence intervals (both ONE and TWO Tail) with 1%, 5% and 10% level of significance.

Other than these, if required would be supplied to you.

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