The Normal Distribution Is a Theoretical Distribution for a Population

question 32

Multiple Choice

The normal distribution is a theoretical distribution for a population. The distribution can be used to estimate how risky a cash flow or return is. If the mean is 12% and the standard deviation is 22.6%, what is the range of possible returns for a 2 standard deviation change and what percentage of all observations would fall within 2 standard deviations?

• A) 24%, 68%.
• B) 24%, 96%.
• C) 90%, 68%.
• D) 90%, 96%.

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Definitions:

Monthly Income

The total amount of income a person or household receives in a month, from all sources.

Consumer Expenditure Survey

An annual survey conducted by the Bureau of Labor Statistics to collect data on the spending habits of American consumers.

Consumer Expenditures

The total amount of money spent by consumers on goods and services in a specified period.

Proportion

Proportion refers to the relative relationship in size, amount, or degree between two or more things, often expressed as a ratio or fraction.