Suppose that a researcher approximates the density of CAD/USD exchange rate by x~N(1.00,0.0004)
(a) Find a value of Xc such that X will lie within μ+/-Xc 90% of the time.
(b) Find a value of Xc such that X will lie within μ+/-Xc 95% of the time.

Question

Suppose that a researcher approximates the density of CAD/USD exchange rate by x~N(1.00,0.0004)
(a) Find a value of Xc such that X will lie within μ+/-Xc 90% of the time.
(b) Find a value of Xc such that X will lie within μ+/-Xc 95% of the time.

anonymous · Answer

By density I'm assuming mean probability distribution. In this case $X_c$ is merely our *margin of error* from our confidence interval at those given levels of confidence ;-) We should know $X_c=z^*\sigma$

anonymous · Answer

Ooops, I meant tolerance interval: http://en.wikipedia.org/wiki/Tolerance_interval