99% Confidence interval and standard deviation three, normal, correct, question, standard

domani

So there a question on the sample exam in the answer which they state that 99% of observations under a normal distribution will be plus/minus three standard deviations. Is this correct? My understanding was that 99% of observations under a normal distribution will be plus/minus 2.58 standard deviations

ramdabom

Yes 3 is the approximate value and the CFAI book mentions that. But if there is a choice with 3 and 2.58, i would go with the later.

amqata

General practice is to say that +-3s. But, 2.58 is technically more correct. It doesn't matter you can use anyone you want. I would go for +-3s

cchang

68% values lie in between +- 1 sd
95% of values lie in between +- 2 sd
99% of values lie in between +-3sd

Never heard of using +-2.58sd :S.

sgupta0827

Yes, I remember seeing them both in the text at different locations. (i.e. 3 and 2.58)

I guess both are correct, 3 being more conservative than 2.58. So, if there is a choice between 3 and 2.58, I would choose 3. i.e. if a value lies between +- 2.58 standard deviations, it must for sure lie between +-3 standard deviations too.

Someone, please comment on this.