Level 1 Volume 1 Reading 10 somebody, question, number

mar350

Can somebody pls help me with question number 10 at the end of Reading 10 (Sampling and Estimation)?
I don’t seem to be able to work out the answer to the question 10 a). I have no idea where they got the results from.
Cheers,
MK

Makavelim3

Yes, the question makes sense.
The probability of the exchange rate being less than (or equal to) one, two and three SDs away from the expected future value are the probabilities of one, two and three standard deviations away from the mean of a normal distribution, i.e. 68.27%, 95.45% and 99.73%.
Hence, we are asked to calculate the probability of being at least this amount away, so you take 1 minus these values. This will give you 31.73%, 4.55% and 0.27% (close enough to the answers above).
Hope that helps.

thommo77

The question is as follows:
An exchange rate has a given exptected future value and standard variation. Assuming that the exchange rate is normally distributed, what are the probabilities that the exchange rate will be at least 1, 2, or 3 standard deviations away from its mean?

dontknow1987

Post the question, you might more responses that way.