The price-earnings ratio for firms in a given industry follows the normal distribution. In this industry, a firm whose price-earnings ratio has a standardized value of z = 1.00 is approximately in the highest ______ percent of firms in the industry.
A)16 percent
B)34 percent
C)68 percent
D)75 percent

Question

Quizplus · Accepted Answer

In a normal distribution, a z-score of 1.00 corresponds to the 84th percentile, meaning the value is higher than approximately 84% of all values in the distribution. Therefore, the firm is in the highest 16% (100% - 84% = 16%).

The Price-Earnings Ratio for Firms in a Given Industry Follows