Probability

Bernoulli Trial

A single experiment with exactly two outcomes, conventionally labelled success and failure.

Mean p, variance p(1-p). The atom from which the binomial, geometric and negative binomial distributions are built.

A Bernoulli variable is the same object as an indicator variable - the difference is one of emphasis. "Bernoulli" stresses the experiment; "indicator" stresses using it inside a sum to exploit linearity.

Worth noticing: for a Bernoulli variable, X^2 = X, since 0 and 1 are both fixed by squaring. That immediately gives the variance as p - p^2 = p(1-p), which is the quickest derivation.

Related terms

Practise this

Put it into practice

Knowing the definition is not the same as spotting where it applies under time pressure. Work the question bank free.

Start practising free

Browse the full quant interview glossary