Académique Documents
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(8th Edition)
Chapter 5
Some Important Discrete
Probability Distributions
Random variable
Outcomes of an experiment expressed
numerically
e.g.: Toss a die twice; Count the number of
times the number 4 appears (0, 1 or 2
times)
Probability Distribution
Values Probability
T 0 1/4 = .25
1 2/4 = .50
T 2 1/4 = .25
T T
© 2002 Prentice-Hall, Inc. Chap 5-5
Discrete Probability Distribution
0 P X j 1 P X 1 j
E X X jP X j
j
X jP X j
j
Variance
Weight average squared deviation about
the mean
E X X j P X j
2 2 2
Example of variance:
Toss two coins, count number of tails,
compute variance
X j P X j
2 2
Investment
P(XiYi) Economic condition Dow Jones fund X Growth Stock Y
.2 Recession -$100 -$200
.5 Stable Economy + 100 + 50
.3 Expanding Economy + 250 + 350
37,900 Y 194.68
© 2002 Prentice-Hall, Inc. Chap 5-13
Computing the Covariance
for Investment Returns
Investment
P(XiYi) Economic condition Dow Jones fund X Growth Stock Y
.2 Recession -$100 -$200
.5 Stable Economy + 100 + 50
.3 Expanding Economy + 250 + 350
Discrete Probability
Distributions
X ! n X !
P X : probability of X successes given n and p
X : number of "successes" in sample X 0,1, , n
p : the probability of each "success"
n : sample size Tails in 2 Tosses of Coin
X P(X)
0 1/4 = .25
1 2/4 = .50
np 1 p
0 1 2 3 4 5
e.g.:
np 1 p 5 .11 .1 .6708
© 2002 Prentice-Hall, Inc. Chap 5-19
Binomial Distribution in PHStat
Mean
P(X) = 0.5
.6
EX .4
.2
N 0 X
XiP Xi 0 1 2 3 4 5
i 1
P(X) = 6
Standard deviation .6
.4
and variance .2
2
0
0 2 4 6 8 10
X
Mean
A
EX n
N
Variance and Standard Deviation
nA N A N n Finite
2
Population
N2 N 1 Correction
Factor
nA N A N n
N 2
N 1
© 2002 Prentice-Hall, Inc. Chap 5-27
Hypergeometric
Distribution in PHStat