Hi, For Q1 Part (ii)(a) Option 2, I attempted to calculate the shortfall probability doing P(9000X<10000), however I am not getting the same solution in the mark scheme. I would have standardized this to get P(z<(10/9-0.15)/0.15) which doesn't appear to be correct. Would someone be able to explain the solution of P(X<(10/9-1)) please? Thanks
I think it's because you are investing the 9k for one year, so you actually want P(9000*(1+i)<10000). Then you would standardise as you have shown above.