ABSTRACT
The previous chapter concentrated on some probability distributions, chiefly the binomial distribution and its application in the process of hypothesis testing. The main characteristic of these distributions was that they modelled the “behaviour” of discrete random variables. In this chapter we will focus on the distribution of continuous random variables. These are variables for which the value of each individual outcome is not predictable, and for which it is not possible to make a list of the values these outcomes can take. In particular we will describe the characteristics of the normal distribution and of the standard normal distribution. Furthermore, a more detailed description of the logic of hypothesis testing will be provided using the standard normal distribution. Finally, we will show how the standard normal distribution can be used as an approximation of the binomial distribution.
