Suppose That Height Is a Normally Distributed Variable with Mean

question 28

Multiple Choice

Suppose that height is a normally distributed variable with mean of 66 inches and a standard deviation of 3 inches. You are 72 inches tall. How many standard deviations are you above the mean?

• A) impossible to tell without more information
• B) 1
• C) 2
• D) 3

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Definitions:

Profitability Index

A financial metric used to measure the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment.

Discount Rate

The discount rate utilized in determining the present value of future cash flows through discounted cash flow (DCF) analysis.

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment by calculating the present value of expected cash flows minus the initial cost.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.