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CHAPTER 4: Distributions > NORMAL DISTRIBUTION
NORMAL DISTRIBUTION
The normal distribution is probably the most widely used distribution in statistics, and is extremely popular in finance. The normal distribution occurs in a large number of settings, and is extremely easy to work with.
In popular literature, the normal distribution is often referred to as the bell curve because of the shape of its probability density function (see Figure 4.5).
FIGURE 4.5 Normal Distribution Probability Density Function
The probability density function of the normal distribution is symmetrical, with the mean and median coinciding with the highest point of the PDF. Because it is symmetrical, the skew of a normal distribution is always zero. The kurtosis of a normal distribution is always 3. By definition, the excess kurtosis of a normal distribution is zero.