The monthly returns for a financial advisory service can be modeled by a Normal distribution with a mean of $123 and standard deviation of $75, per $10,000 invested. Find the following boundaries: (use 4 decimals for all answers) (a) the middle 80% of monthly returns: ______ and _______ (Enter the lower value first.)
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
The monthly returns for a financial advisory service can be modeled by a
(a) the middle 80% of monthly returns: ______ and _______ (Enter the lower value first.)
(a)
Let x denotes the monthly returns which follows normal distribution with mean of $123 and standard deviation of $75.
Let and be the monthly return values.
The middle 80% of monthly returns is,
Computation of critical value:
The critical value of z-distribution can be obtained using the excel formula “=NORM.S.INV(0.90)”. The critical value is 1.28155.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
