The binomial approximation is the first-order approximation
|
(1)
|
for .
It follows by truncating the binomial series
|
(2)
|
after its linear term. More precisely, for fixed ,
|
(3)
|
as .
Here
is big-O notation indicating a remainder whose
magnitude is bounded by a constant multiple of
for all sufficiently small
. The approximation is exact when
or 1.