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John Moffat.
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firelion28
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- ☆☆☆
hi john, if they say that the standard deviation is 2000 per day, does it mean that suppose the mean in 5000, so the cash flow deviiates to 7000 and (5000-2000) = 3000 , so does the cash fluctuate within 7000 and 3000 per day
John Moffat
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- ☆☆☆☆☆
No it does not mean that.
This is the only place that the standard deviation is mentioned in the exam, and you cannot be tested on what it means (apart from the fact that is is a measure of spread).
(In fact, there is a 95% probability that the cash flows are between plus or minus 1.96 standard deviations of the average. But do not ask me to explain that further – it would waste both of our times because it cannot be asked for in the exam.)
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