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:

Cash Balance

The amount of money a company has in its cash accounts, including currency, coins, and balances in checking and savings accounts.

Allowance for Doubtful Accounts

An adjusted estimation for the amount of receivables that may not be collectible.

Accounts Receivable

Funds that are due to a company from its clients for products or services delivered but for which payment has not been received.

Net Sales

The total revenue from goods or services sold by a company after deducting returns, allowances for damaged or missing goods, and discounts.