A portfolio has a current value of $1000. The annual profit $X$ is distributed normally with mean 100 and standard deviation 100. What is the probability that the portfolio will be worth less than 800 after one year?
A) 0.0014
B) 0.0062
C) 0.0228
D) 0.1587

Question

Quizplus · Accepted Answer

The portfolio will be worth less than 800 if the profit $X$ is less than -200. We standardize this to find $P(X < -200)$ using the Z-score: $Z = \frac{-200 - 100}{100} = -3$. The probability $P(Z < -3)$ is approximately 0.0014.

A Portfolio Has a Current Value of $1000 XXX Is Distributed Normally with Mean 100 and Standard Deviation 100

A Portfolio Has a Current Value of $1000 $X$ Is Distributed Normally with Mean 100 and Standard Deviation 100