Definition of Multinomial distribution:
In finance, analysts use the multinomial distribution to estimate the probability of a given set of outcomes occurring, such as the likelihood that a company will report better-than-expected earnings while its competitors report disappointing earnings.
The multinomial distribution is the type of probability distribution used to calculate the outcomes of experiments involving two or more variables. The more widely known binomial distribution is a special type of multinomial distribution in which there are only two possible outcomes, such as true/false or heads/tails.
A combination of probability distribution of a number of random variables which indicates the number of times an exclusive event will occur in a repeated independent multinomial trial. Hence, it is able to indicate the possibilities of obtaining a particular result from a number of trials.
How to use Multinomial distribution in a sentence?
- The multinomial distribution is a probability distribution used in experiments with two or more variables.
- There are different kinds of multinomial distributions, including the binomial distribution, which involves experiments with only two variables.
- The multinomial distribution is widely used in science and finance to estimate the probability of a given set of outcomes occurring.
Meaning of Multinomial distribution & Multinomial distribution Definition