Quick Definition

Normal distribution, often referred to as the bell curve, is a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Formula

Examples

• 1In finance, the returns of a well-diversified stock portfolio often follow a normal distribution.
• 2Risk management uses normal distribution to calculate the probabilities of extreme losses in investment portfolios.
• 3In performance analysis, employees' performance ratings may follow a normal distribution, where most employees are rated around the average, with few exceptionally high or low ratings.

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