Hi,
I am an undergraduate student doing a business degree. I have a piece of tutorial work on sampling at a lower level than I am sure most of you are used to.
I have a question, I have done an NPV calculation using excel with costs and profits (a0, a1, etc.) each of uniform distribution. When the NPV's are analysed they show something near to a normal distribution on the histogram. Why does combing several uniform distributions in a calculation produce a normal distribution?
Thanks in advance for any help you provide.
2006-11-01 07:15:28 · 4 answers · asked by joemoran7 2 in Science & Mathematics ➔ Mathematics
That is the central limit theorem. Each distribution can be uniform, but the distributions themselves are normally distributed in their range, their value, their frequency.
Read the attached link for more details.
2006-11-01 07:23:32 · answer #1 · answered by Vincent G 7 · 0⤊ 0⤋
because random sampling results in a bell-shaped histogram. If your distributions do not deviate by more than one degree from standard, you will always create a normal distribution.
2006-11-01 07:20:12 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Because multiplication is communative.
M times V
is the same as
V times M
2006-11-01 07:17:59 · answer #3 · answered by Anonymous · 0⤊ 1⤋
it is the definition of Normal distribution that sum of normals is again normal.
2006-11-01 07:24:09 · answer #4 · answered by Anonymous · 0⤊ 0⤋