A Risk-Benefit Analysis Model for Project Investment Based on the Normal Distribution

Abstract

Normal distribution formula is very important to analyze the reciprocity between the random event probability and the events. There exists certain kind of reciprocity between random variable that conforms to normal distribution and its parameter. Solutions to apply normal distribution to the evaluation of continuous random variable, optimize the random variables by adopting optimization principles and methods were proposed in this paper. The purpose is to establish random variable standard deviation expected value function that conforms to normal distribution. The reciprocity among random variable, expected value and standard deviation, that is, the “mutual restraint principle of the three elements” were explored in this paper, in order to improve the accuracy and scientificity of decisions of random variable that conforms to normal distribution, avoid decision-making errors, and enhance the policy-making reliability.