Normal probability distribution
A probability distribution for a continuous random variable that is forms a symmetrical bell-shaped curve around the mean. |
Similar financial terms
Abnormal returnIn event studies, the part of the return that is not predicted; the change in value caused by the event. Also referred to as excess return, benchmark adjusted.
Lognormal distribution
A varaible has a lognormal distribution when the logarithm of the variable has a normal distribution.
Abnormal returns
Part of the return that is not due to systematic influences (market wide influences). In other words, abnormal returns are above those predicted by the market movement alone.
Standardized normal distribution
A normal distribution with a mean of 0 and a standard deviation of 1.
Normalizing method
The practice of making a charge in the income account equivalent to the tax savings realized through the use of different depreciation methods for shareholder and income tax purposes, thus washing out the benefits of the tax savings reported as final net income to shareholders.
Normal random variable
A random variable that has a normal probability distribution.
Normal portfolio
A customized benchmark that includes all the securities from which a manager normally chooses, weighted as the manager would weight them in a portfolio.
Normal backwardation theory
Holds that the futures price will be bid down to a level below the expected spot price.
Normal annuity form
The manner in which retirement benefits are paid out.
Cumulative abnormal return (CAR)
Sum of the differences between the expected return on a stock and the actual return that comes from the release of news to the market.
Probability function
A function that assigns a probability to each and every possible outcome.
Probability distribution
Also called a probability function, a function that describes all the values that the random variable can take and the probability associated with each.
Probability density function
The probability function for a continuous random variable.
Probability
The relative likelihood of a particular outcome among all possible outcomes.
Base probability of loss
The probability of not achieving a portfolio expected return.
Cumulative probability distribution
A function that shows the probability that the random variable will attain a value less than or equal to each value that the random variable can take on.
Skewed distribution
Probability distribution in which an unequal number of observations lie below and above the mean.
Secondary Distribution
The redistribution to the public of a block of shares owned by an existing shareholder (not from the corporate treasury).
