The Normal Distribution is a continuous probability distribution defined by the mean and standard. It is one of the most common distributions because it describes many natural phenomena.

A probability distribution, usually displayed graphically, shows the relative likelihood of all possible outcomes occurring within a specific time period.

Bell Curve vs. Non-Normal Distributions The normal probability distribution assumption doesn’t always hold true in the financial world, however.

Normal probability distribution is assumed in financial models; however, the returns of many securities tend to demonstrate a non-normal distribution.