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    Using the z-score to calculate the probability

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    A portfolio manager believes that tomorrow's foreign exchange rate of German marks per U.S. dollar will be Normally distributed with mean 2.03 and standard deviation 0.08. Using the manager's numbers:

    1. what is the probability that tomorrow's rate will be above 2.08?
    2. what is the probably that tomorrow's rate will be below 1.85?
    3. what is the probability that tomorrow's rate will be between 2.00 and 2.20?

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    Solution Preview

    Please see the attached file for detailed solution.
    A portfolio manager believes that tomorrow's foreign exchange rate of German marks per US dollar will be Normally distributed with mean 2.03 and standard deviation 0.08. Using the manager's numbers:
    Normal distribution: mean , standard deviation
    Then corresponding z-score is for any x value.
    Once we know the z-score, we find the cumulative probability associated with the z-score by the standard ...

    Solution Summary

    The solution shows how to use z-score to calculate the probability of the foreign exchange rate.

    $2.19

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