Answer to Question #50332 in Finance for Rob

Question

A random variable X is normally distributed with a mean of 175 and a standard deviation of 50. Given that X = 150, its corresponding Z- score is –0.50.

true or false

Answer 1

A z-score shows how many standard deviations away from the average a result is in a normal distribution. The normal distribution is also known as a bell curve. The standard deviation represents the spread of the data: the larger the spread, the larger each standard deviation. So, if the mean is 175 and the standard deviation is 50, corresponding Z - score for X = 150 is (150 - 175)/50 = –0.5. So, the statement is true.