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Investments glossary

What is Probability Density Function (PDF)?

Probability density function (PDF) is a statistical expression that defines a probability distribution (the likelihood of an outcome) for a discrete random variable (e.g., a stock or ETF) as opposed to a continuous random variable. The difference between a discrete random variable is that you can identify an exact value of the variable. For instance, the value for the variable, e.g., a stock price, only goes two decimal points beyond the decimal (e.g. 52.55), while a continuous variable could have an infinite number of values (e.g. 52.5572389658…).

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