A drop is an item obtained by killing a monster. No source for the below information has been given, but this link[1] to the French forums provides an explanation which supports these claims.
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Each drop has three values associated with it: Drop Rate, Prospecting Lock, and Drop Limit.
The drop rate refers to the probability of a monster dropping an item after it is defeated in combat. An item's drop rate can be improved by the prospecting of an individual player.
Example: A 4% base drop rate would become 7% with 175 prospecting (i.e., 4 multiplied by 1.75).
Although each player in a fight rolls separately, a group has a statistically better chance of dropping the more players it has, and the higher each member's individual prospecting is.
Statistically, the more people in a fight, the better the odds that at least one person in the fight will get a given drop. The probability of at least one person getting a drop is calculated as follows:
Pt = 1((1(PP_{1}*D))*(1(PP_{2}*D))...*(1(PP_{G}*D)))
Therefore, for an item with a drop rate of 5% and a party of 8 people with a prospecting of 100 each:
Pt = 1((1(1*.05))^{8}) = 1((1.05)^{8}) = 1(.95^{8}) = 1.6634 ^{see note} = .3366 or 33.66%
note: rounding is necessary at this step to keep the number manageable
If there is more than one of a given monster in a group, each monster will have the same chance to drop an item. The math is the same, only now the number of monsters is relevant instead of the number of players.
Pf = 1(1Pt)^{M}
(this one's simpler because you are dealing with multiple instances of a value that will definitely be the same)
If there are 5 of the monster in the mob, using Pt from the example above:
Pf = 1(1.3366)^{5} = 1(.6634)^{5} = 1(.2920) ^{(rounding again)} = .7080 or 70.8%
The prospecting lock is the minimum amount of prospecting that a player or group of players must have before a drop has a chance to occur. If the prospecting lock is not met, there is no chance of getting the drop, no matter how high the drop rate is.
Prospecting locks vary widely. Some prospecting locks are so low that a single player will always have a chance of getting the drop. (In fact, some prospecting locks must be zero because nonpaying players are able to get drops while soloing, yet nonpaying players have zero prospecting.) Some locks are a little higher but can still be unlocked by a single player who has increased their prospecting through character points and/or equipment. Some locks are so high that they cannot be unlocked by a single player but require a group of players. The highest prospecting locks can only be unlocked by large groups of players. It is the prospecting at the end of the fight that matters, not the prospecting at the beginning.
Some drops have a drop limit. For example, a horn dropped by a monster with only two horns might have a limit of 2. This means only 2 horns may drop from each monster. Even if three or more players succeeded their drop rolls, only the two first receive a horn.
It should also be noted that if a monster drops a horn, wool, and leather, each player can receive only one horn, wool, or leather for each of that monster in the fight. Of course once the drop limit (if there is one) is reached, subsequent players rolling for drops can't get the item anymore.
When the player side wins a fight against monsters, the players may receive drops. Each character gets a drop roll on each drop of each monster, except those drops with prospecting locks higher than the total prospecting of the team. If a drop roll is successful the character receives the item, unless the drop limit for that item has already been reached.
The character with the highest prospecting rolls for items first, followed by the character with the second highest prospecting, and so forth. In the case where two or more characters have the same prospecting, the tie is broken by Initiative.
DISCLAIMER: The information in this article is based on experimental research conducted by the community, and may contain inaccuracies and speculation. While we strive for accuracy in these articles, we make no claims of experimental rigor or unbiased conclusions. Caveat lector.

Drop rate is a term defined in this wiki (not by ANet) to refer to the patterns that govern how drops occur. There are two sides to studying drop rates in Guild Wars:
The main focus of studying drop rates of loot is obviously farming. Successful farming is not just based on having the best build to successfully kill and survive, but also, killing the right monsters that produce the desired loot as quickly as possible.
An example of this, is farming Ecto. Most farming groups farm the Smite Crawlers, while actual statistical data shows that the Bladed Aatxe drop Ectos at twice the rate.
The specifics of how a drop rate is determined ingame are unknown. ANet has not published any statistics on any item or monster. Still, basic data can be collected on each monster to record the kind of drops that they leave behind. This data compiled in large amounts can show the rough percentages of the different kinds of loot that a monster drops.
In general, there are several types of loot that a monster can drop:
With the addition of loot scaling (20 April 2007 Update) the party size only affects the drop rate of items exempt from Loot Scaling. The drop rate on all other items is scaled so that a solo farmer will receive approximately the same number of nonexempt items (blue rarity, collectable items, etc.) as a character in a party of eight people.
It is currently unknown how Hard Mode affects drop rates. The drop rates for Hard Mode are tracked in a separate table from Normal Mode on the same creature drop rate page.
This article is the cover page of a project to document each and every creature in Guild Wars in term of their Drop Rates. Users who wish to contribute to this project should follow the following steps:
Creature  Gold  Equippable Items  Salvage Armor  Common Materials  Rare Materials  Keys  Collectables  Dyes  Nothing  Total  Signature  

G  P  B  W  
Blessed Griffon  8  0  0  1  0  0  0  0  1  1  0  24  35  Fox Bloodraven 05:12, 28 November 2006 (CST) 
Blessed Griffon  9  0  0  2  1  0  0  0  0  0  0  18  30  Fox Bloodraven 06:58, 28 November 2006 (CST) 
The hope is that with this project, players can make informed decisions instead of following rumors about drops.
See User:RolandOfGilead/Java/Drop Rate Tool for a Java program that simplifies the task of recording drop rates.
This is a list of subarticles containing data collected so far, sorted by region:
The Underworld

The Fissure of Woe 
PreSearing Ascalon 
Ascalon 
Northern Shiverpeaks 
Kryta 

Maguuma Jungle 
Crystal Desert 
Southern Shiverpeaks 
Ring of Fire Islands 
Shing Jea Island 
Kaineng City 
Echovald Forest 
Jade Sea 
Istan 
Kourna and Vabbi 
The Desolation 
Realm of Torment 
See also: Template:Drop Rate Table for creating Drop Rate Tables.
Part of this project is that we are also recording the quality and type of drops that fall from chests. In this we are trying to understand the likelihood of getting good drops from chests:
Prophecies Chests

Factions Chests

Nightfall Chests

Drop Rate is the probability that a monster is expected to yield a certain item when killed once by a player. When calculating a drop rate, divide the number of times you have gotten the certain item, by the total number of that NPC that you have killed. For example:
A common misconception is that you are guaranteed that item when you kill the NPC number of times, where is the drop rate. You are never guaranteed anything, no matter how many times you kill that monster. The drop rate is simply the probability of getting a certain drop in one kill. The probability that a monster will drop the item at least once in kills is 1 minus the probability that it will not drop that item in kills, or .
For example, if dust devils are expected to drop a Dragon chainbody once out of 15000 kills, then the probability that a player will get at least one Dragon chainbody after 15000 kills is
Which is approximately 63.21%. Similarly, we can solve for the number of Dust Devils you need to kill to have a 90% probability of getting one when you kill them:
Which yields the answer 34538. There is also an equation for computing the probability of a certain amount r of a particular drop after n amount of kills:
And if you take the sum of this equation from when r=1 until r=n you get the probability of at least 1 drop of a particular item after n kills:
Drop rates are often quite difficult to obtain, as an accurate estimation of one requires thousands of kills. Because of this, some players who wish to calculate drop rates keep a list of items that a monster drops after each kill, sometimes called a "drop log." Then they calculate the percentage by dividing the number of desired drops by the total number of kills. All monsters found on this Wikia contain a list of the items they drop. Behind those items you will often find between brackets a drop rate indication for that item. The drop rate of items has been divided into six different groups displayed below.
Drop rate  Example*  
Very common  110  Coins 
Common  1150  Runes 
Uncommon  51100  Rune armour 
Rare  101500  Half key 
Very rare  5011,000  Dragon items 
Extremely rare  1,001+  Draconic visage; Slayer Trophy heads 
* examples are only given as indication because they depend on the monster that drops it. An item dropped by a boss monster could be a common item while it would be very rare for normal monsters.
The rarer a drop is (or the smaller becomes), the closer the probability of obtaining that item in kills approaches , or approximately , where e is the exponential constant . We can express this limit as follows:
This follows from the definition of :
