What is the formula for a z-score?

Enhance your quantitative skills with the PHFO Quantitative Analysis for Business Exam. Prepare with multiple choice questions, accurate hints, and detailed explanations. Success is one step away!

Multiple Choice

What is the formula for a z-score?

Explanation:
A z-score shows how many standard deviations a value is from the mean, which allows you to compare scores from different distributions on a common scale. Start by centering the value around the mean so the mean becomes zero, then rescale by dividing by the standard deviation so one unit in the z-score equals one standard deviation of the data. This makes the result dimensionless and enables direct comparison across datasets. So the z-score is computed as z = (x − μ) / σ. If x equals the mean, z is 0; if x is one standard deviation above the mean, z is 1; if it’s two standard deviations below, z is −2, and so on. Note that with sample data you might see z-scores written using the sample mean and sample standard deviation, (x − x̄)/s, but the core idea remains the same: subtract the mean to center, then divide by the standard deviation to standardize.

A z-score shows how many standard deviations a value is from the mean, which allows you to compare scores from different distributions on a common scale. Start by centering the value around the mean so the mean becomes zero, then rescale by dividing by the standard deviation so one unit in the z-score equals one standard deviation of the data. This makes the result dimensionless and enables direct comparison across datasets.

So the z-score is computed as z = (x − μ) / σ. If x equals the mean, z is 0; if x is one standard deviation above the mean, z is 1; if it’s two standard deviations below, z is −2, and so on.

Note that with sample data you might see z-scores written using the sample mean and sample standard deviation, (x − x̄)/s, but the core idea remains the same: subtract the mean to center, then divide by the standard deviation to standardize.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy