Probability Density Function - PDF

AAA

DEFINITION of 'Probability Density Function - PDF'

A statistical measure that defines a probability distribution for a random variable and is often denoted as f(x). When the PDF function is graphically portrayed, the area under the graph will indicate the interval under which the variable with fall.

INVESTOPEDIA EXPLAINS 'Probability Density Function - PDF'

The probability density function is often used in the creation of financial and economic modeling for forecasting purposes. More specifically, the PDFs of futures exchange rates and equity prices can be employed in models in order to get a more complete picture regarding future market sentiment.

RELATED TERMS
  1. P-Value

    The level of marginal significance within a statistical hypothesis ...
  2. Log-Normal Distribution

    A statistical distribution of random variables which have a normally ...
  3. Kurtosis

    A statistical measure used to describe the distribution of observed ...
  4. Probability Distribution

    A statistical function that describes all the possible values ...
  5. Normal Distribution

    A probability distribution that plots all of its values in a ...
  6. Statistics

    A type of mathematical analysis involving the use of quantified ...
Related Articles
  1. Why The Consumer Price Index Is Controversial
    Economics

    Why The Consumer Price Index Is Controversial

  2. Find The Highest Returns With The Sharpe ...
    Bonds & Fixed Income

    Find The Highest Returns With The Sharpe ...

  3. What is the average salary for an accountant?
    Personal Finance

    What is the average salary for an accountant?

  4. All About Liquid Commodities
    Options & Futures

    All About Liquid Commodities

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center