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Q. Describe Standard Normal Distribution?
Ans.
The Standard Normal Distribution has a mean of 0 and a standard deviation of 1. The letter Z is often used to refer to a standard normal random variable.
Note that, although many applications in the real world have a normal distribution, rarely does anything in the real world follow a standard normal distribution. This is a convenient distribution that can be used (after some transformations) for ANY normal distribution. In the following examples, we will work through finding probabilities for a standard normal random variable.
Click here to see a table with probabilities for the standard normal distribution.
The area under the curve, the shaded area in this diagram, represents the probability of a normally distributed random variable obtaining a value less than z,.
The entries in the table are the probabilities that a random variable having the standard normal distribution assumes a value less than z.
David invests $17,000 into an account and at the end of 7 years, his account has a balance of $ 26,417.77. What is the interest rate (assuming annual compounding)?
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