FIN300 Handout Prob Distr - UNIVERSITY OF ILLINOIS College...

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UNIVERSITY OF ILLINOIS   College of Business - Department of Finance Finance 300 (Financial Markets) Investment Risk Analysis Using The Standard Normal Probability Distribution   As noted in the previous discussion, there are many normal probability distributions — a different one for each pair of  values for a mean and a standard deviation. This principle makes the normal probability distribution applicable to a  wide range of real-world situations. However, since there are an infinite number of probability distributions, it would  be awkward to construct tables of probabilities for so many different normal distributions. An efficient method for  overcoming this difficulty is to  standardize  each  normal   distribution Standard normal distribution : A normal distribution with a mean of 0 and a standard deviation of  1. An actual distribution is converted to a standard normal distribution using a 
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This note was uploaded on 04/06/2008 for the course FIN 300 taught by Professor Jackson during the Fall '07 term at University of Illinois at Urbana–Champaign.

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FIN300 Handout Prob Distr - UNIVERSITY OF ILLINOIS College...

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