The price-earnings ratio for firms in a certain industry follows the normal distribution. A firm's…
In a standard normal distribution, the area between the mean (Z = 0) and Z = +1.0 is 0.3413 (or 34.13%). Therefore, the proportion of firms in the upper tail with a Z-score…
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The price-earnings ratio for firms in a certain industry follows the normal distribution. A firm's price-earnings ratio has a standardized value (Z) = 1.0 and it is included in the highest __________ of firms in the industry.
Answer and explanation
Correct answer C
In a standard normal distribution, the area between the mean (Z = 0) and Z = +1.0 is 0.3413 (or 34.13%). Therefore, the proportion of firms in the upper tail with a Z-score exceeding +1.0 is 0.5000 − 0.3413 = 0.1587, meaning the firm is in the highest 15.87% of firms in the industry.
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UGC NET Commerce