inverse cumulative normal function


content.pristine
Finance Junkie
Posts: 356
Joined: Wed Apr 11, 2012 11:26 am

Re: inverse cumulative normal function

Postby content.pristine » Tue Nov 06, 2012 1:01 pm

I hope you understand the difference between probability density function and cumulative distribution function.

Now, the normal function gives you a relation between Z and probability. For example, if you input a Z value, the normal function givens you a probability. If Z=2.33, the normal function = 2.64%. Now the inverse of this means, if you input 2,64%, it gives you the Z value.

Similarily, if you input the cumulative probability, the inverse cumulative normal function gives the Z value.

Hope this helps!
8-)


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