Student's t-Distribution
Also called: t distribution, Students t
The t-distribution is a bell curve with fatter tails than the normal, used when the variance is estimated from a small sample. Its shape depends on the degrees of freedom, converging to the normal as the sample grows. Its fat tails also make it a popular alternative to the normal in risk modelling, where the extra tail weight is not a small-sample correction but a description of how markets actually behave.
Want more than a definition? Learn it in Stat Dojo →