Suppose your monthly earnings are normally distributed with a mean of $1700 and a standard deviation of $100. Suppose that your monthly expenses are normally distributed with a mean of $1900 and a standard deviation of $100. What is the 95th percentile of the distribution of savings (or debt) that you will have after one year, that is, after 12 months of varying earnings and expenses? What is the 5th percentile?
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
Suppose your monthly earnings are
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