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Definition of 'Bell Curve'
The most common type of distribution for a variable. The term "bell curve" comes from the fact that the graph used to depict a normal distribution consists of a bell-shaped line.
The bell curve is also known as a normal distribution. The bell curve is less commonly referred to as a Gaussian distribution, after German mathematician and physicist Karl Gauss, who popularized the model in the scientific community by using it to analyze astronomical data.
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Investopedia explains 'Bell Curve'
The highest point in the curve, or the top of the bell, represents the most probable event. All possible occurrences are equally distributed around the most probable event, which creates a downward-sloping line on each side of the peak.
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The bell curve is an excellent way to evaluate stock market risk over the long term.
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Check out how the assumptions of theoretical risk models compare to actual market performance.
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Volatility is not the only way to measure risk. Learn about the "new science of risk management".
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