A normal distribution question worked through

When answering any normal distribution question you should always draw a
picture to locate the region of interest.
Any normal probability represents the area under the bell curve of the region
of interest.
Table 3 in the text book gives the areas from the centre of the bell curve to a
z score. Because the bell curve is symmetrical only +z scores are shown but
the areas are identical if the z score is negative.
Before the table can be used a score must be turned into a z score by using the
formula

=
x
z
The area under the whole bell is ! and each side has an area of ".#.
$ften the area we need to find re%uires us to add the area found in the table to
0.5
Or
To find a tail area minus the area found in the table from 0.5
Examples
The Rural Bank is reviewing its service charges and interest paying
policies on cheque accounts. The bank has found that the average daily
balance on personal cheque accounts is $!.!!" with a standard
deviation of $#!.!!. $n addition" the average daily balances have been
found to be normally distributed.
#. %hat percentage of personal cheque account customers carry average
daily balances in excess of $&!!.!!'
(. %hat percentage of customers carries a balance of $(!!.!! or lower'
). %hat percentage of customers carries a balance of $*!!.!! or lower'
+. The bank is considering paying interest to customers carrying average
daily balances in excess of a certain amount. $f the bank does not want to
pay interest to more than , of its customers" what is the minimum daily
balance it should pay interest on'
!olutions
##" =
!#" =
#. %hat percentage of personal cheque account customers carries an
average daily balances in excess of $&!!.!!
"irst convert &'"" to a z score
() . !
!#"
##" '""
=

x
z
!econd look up table 3 to find the area between the centre and the z score !.()
area * ".+#,#
#hird find
- () . ! . - '"" . > = > z P x P
by subtracting ".+#,# from ".#
"+)# . " +#,# . " # . " - () . ! . - '"" . = = > = > z P x P
(. %hat percentage of customers carries a balance of $(!!.!! or lower'
"irst convert &,"" to a z score
33 . ,
!#"
##" ,""
=

x
z
!econd look up table 3 to find the area between the centre and the z score /,.33. The
area between /,.33 and the centre is the same as the area between the centre and +,.33
area * ".+0"!
#hird find
- 33 . , . - ,"" . < = < z P x P
by subtracting ".+0"! from ".#
""00 . " +0"! . " # . " - 33 . , . - ,"" . = = < = < z P x P
). %hat percentage of these customers carries a balance of $*!!.!!
or lower'
33 . "
!#"
##" (""
=

x
z
1o
(,03 . " !,03 . " # . " - 33 . " . - ("" . = + = < = < z P x P
+. The bank is considering paying interest to customers carrying average
daily balances in excess of a certain amount. $f the bank does not
want to pay interest to more than , of it-s customers" what is the
minimum daily balance it should pay interest on'
The bank will only want to pay interest to a few customers so the daily balance limit
will be in the top end of the balances. #2 represents an area under the bell curve 3 in
this case the area in the right hand tail.
"irst find the rest of the area on the right hand side of the bell #"2 / #2 * +#2 *
".+#""
!econd look up the area ".+#"" .or nearest area to it- in table 3 to find the z score that
corresponds with this area
".++0# corresponds to z * !.(+
".+#"# corresponds to z * !.(#
As ".+#"" lies exactly between these values you could use either z score. 4e
will use z $ %.&'
#hird rearrange the z formula to find the value of x

+ =

= z x x
x
z find to rearrange
)0( ##" !#" (+ . ! = + = x
Any accounts with balances over &)0( will earn interest.