Data
• mean: 4 years
,
• standard deviation, sd = 0.8 years
,
• point of interest, x = 3 years
,
• z-score, z = (x - mean)/sd = (3 - 4)/0.8 = -1.25
,
•
The probability that a CD will last less than 3 years is equivalent to find P(z < -1.25). Using the attached table:
P(z < -1.25) = 0.1056 or 10.56%