Quant's mean

danish.hassan7
Good Student
Posts: 10
Joined: Sat Apr 22, 2017 11:51 am

Quant's mean

Postby danish.hassan7 » Wed May 31, 2017 6:39 am

Please explain the logic of the answer.

What percent of the observations will lie above the mean plus two standard deviations?
Choose one answer.
a. 5% Incorrect
b. 2.5% Correct
c. 95% Incorrect

edupristine
Finance Junkie
Posts: 873
Joined: Wed Apr 09, 2014 6:28 am

Re: Quant's mean

Postby edupristine » Thu Jun 01, 2017 4:49 am

Hi Danish,

According to the empirical rule, or the 68-95-99.7 rule, roughly 95% of the distribution is within 2 standard deviations of the mean. So 100 - 95 = 5% of the distribution is further than 2 standard deviations of the mean. Cut this in half to get 5/2 = 2.5

So 2.5% of the data will lie beyond two standard deviations above the mean.

Thanks!

danish.hassan7
Good Student
Posts: 10
Joined: Sat Apr 22, 2017 11:51 am

Re: Quant's mean

Postby danish.hassan7 » Wed Jun 07, 2017 11:30 am

But when I see the z table. Its showing 97% with 2 standard deviation


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