## quiz- probability and distribution

sandipkumarshaw
Good Student
Posts: 25
Joined: Thu Jan 30, 2014 3:37 pm

### quiz- probability and distribution

The distribution of 1-year returns for a portfolio of securities is normally distributed with an expected value of 45 million, and a standard deviation of 16 million. What is the probability that the value of the portfolio, 1 year hence, will be between 39 million and 43 million?
Choose one answer.
a. 0.096 Correct
b. 0.086 Incorrect
c. 0.106 Incorrect
d. 0.116 Incorrect
The correct answer is A
Normalizing, Z(39) = (39 - 45)/16 = -.375. Z(43) = (43 - 45)/16 = -0.125.
F(-.125) - F(-.375) = -.450 - 354 = .096
I am not able to understand the above step. Pls let me know how to do it in ba2 plus calculator.

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

### quiz- probability and distribution

Are you referring to this step F(-.125) - F(-.375) = -.450 - 354 = .096.

sandipkumarshaw
Good Student
Posts: 25
Joined: Thu Jan 30, 2014 3:37 pm
Yes

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

### quiz- probability and distribution

You can only find it by the help of F table.

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

### quiz- probability and distribution

With the BAII plus financial calculator this can not be calculated . You have to use the table to get it right.

gurpreet.12335
Posts: 1
Joined: Tue Feb 14, 2017 4:24 am

### Re: quiz- probability and distribution

The distribution of 1-year returns for a portfolio of securities is normally distributed with an expected value of 45 million, and a standard deviation of 16 million. What is the probability that the value of the portfolio, 1 year hence, will be between 39 million and 43 million?

a. 0.096 Correct
b. 0.086 Incorrect
c. 0.106
d. 0.116
The correct answer is A
Normalizing, Z(39) = (39 - 45)/16 = -.375. Z(43) = (43 - 45)/16 = -0.125.
F(-.125) - F(-.375) = -.450 - 354 = .096

how have you used f table to find the values?

edupristine
Finance Junkie
Posts: 946
Joined: Wed Apr 09, 2014 6:28 am

### Re: quiz- probability and distribution

The normalized values are calculated using Z values. By using Z table, we obtain the probabilities. Example: P(Z<=.125) is the average of 0.4522 and 0.4483 equalling 0.4502

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