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Z-scores

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Intro to Business Statistics

Definition

A z-score measures how many standard deviations an element is from the mean of a distribution. It is calculated using the formula $z = \frac{x - \mu}{\sigma}$ where $x$ is the value, $\mu$ is the mean, and $\sigma$ is the standard deviation.

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5 Must Know Facts For Your Next Test

  1. Z-scores are used to standardize scores from different distributions for comparison.
  2. A z-score of 0 indicates that the value is exactly at the mean.
  3. Positive z-scores indicate values above the mean, while negative z-scores indicate values below the mean.
  4. In a standard normal distribution, approximately 68% of data falls within one standard deviation (z-score between -1 and 1).
  5. Z-scores can be used to find probabilities and percentiles in a normal distribution.

Review Questions

  • What does a z-score represent in terms of standard deviations?
  • How do you calculate a z-score for a given value in a dataset?
  • What does it indicate when a z-score is negative?
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