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 Normal Distribution, an example from SS 
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Joined: 06 Feb 2013
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So there’s a minor thing that I can’t get. Nothing difficult though, just confusing
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Annual EPS are normally distributed with a mean = 6 and st.dev.=2. The probability of value falling btw 2 and 8?
1) standardizing to the normal distribution:
8 –> z=+1 –> one st.dev. above the mean {z=(8-6)/2}
2 –> z=-2 –> two st.dev. below the mean
68% interval - +/- 1 st.dev., 95% - +/- two st.dev. of the mean.
Since the mean of the normal distribution is zero, we can approximate the probability of the EPS falling between 2 and 8 as
0.68/2 + 0.95/2 = 0.815, or P(2 _________________________________________________________
Why do we divide 0.68 by 2 and not by 1 (68% - 1 st.dev.)?


09 Feb 2013
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Joined: 06 Feb 2013
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the reason being you are finding the probability between mean and 1 and mean and -2 which are half of -2 to 2 and -1 to 1.


09 Feb 2013
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Joined: 10 Sep 2018
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10 Sep 2018
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