In: Finance
18. What proportion of values in a normal distribution will be above 2.33 standard deviations to the right of (or above) the mean?
Normal distribution curve with mean '
' and variance
'
2 ' is
represented as: 
The standard normal distribution is:  
P(Z < z) is the probability of values of Z falling less than z. Where 'z' is a constant.
P(-z < Z < z) is the probability of values of Z falling between -z and +z.
Here ' z ' on a standard normal distribution curve implies z standard deviations from the mean on a normal distribution curve.
So for example the probability of Z less than 1.5, P( Z < 1.5
) represents the proportion of values falling less than
1.5
.
To find out the exact proportion of values falling above 2.33 deviations to the right of the mean we need to find out P(Z > 2.33)
To find out P(Z > 2.33) we need to first find out P( Z < 2.33 ) and subtract this from the total probability, i.e 1.
Standard Z - tables gives the area under the curve starting from the left most point of the table till the required point.
From the standard Z - tables,
P(Z < 2.33) = 0.9901
Total probability = 1
1 - P(Z < 2.33) = P(Z > 2.33)
=> P(Z > 2.33) = 1 - 0.9901
=> P(Z > 2.33) = 0.0099
Therefore, proportion of values falling above 2.33 standard deviations to the right of the mean is 0.99% .