Random Variable – is a variable whose value is determined by chance.

It is usually
denoted by capital letters such as P(X) or P(Y).
We are dealing with an entity that varies in the value and whose behavior is governed by
chance. The following examples provide a collection of random variables for illustrative
purposes.

Types of Random Variables

1. Discrete Random Variable – a random variable that can assume at most a finite or
countable number of possible values.
2. Continuous Random Variable – is the one that can assume any value in some
interval or intervals of real numbers, and the probability that it assumes any
specific value is greater than zero

Mathematical expectation or expected value depends on the probabilities that an event

will happen and the associated amount of money to acquire. Thus in symbols,
where F = is the probability value
X = is the amount of money
For several events that are expected to happen and amounts associated, value is
EV = P1(X1) + P2(X2) + … Pn (Xn)
There are some cases when the computed value of EV is negative; this is the time when
the person tends to lose instead to gain.

NORMAL, BINOMIAL, and POISSON DISTRIBUTION

Discrete and Continuous Variables
Random variables are classified according to the number of values which they can
assume. If the random variable can assume a finite number of values or countable number of
possible values, then we refer to it as a discrete random variable.
Continuous random variable take on any value on some line segment or variable (if there
are no breaks between possible values). Thus, they arise when we deal with quantities measured
on a continuous scale, say time, weight, or distance.
Probability Distribution
1. The Binomial Distribution
Many applied problems involved probability that an event will occur x times out
of n. For example, we may be interested in the probability that 7 out of 12 mice
will survive for a given length of time after the injection of a cancer including
substance, or the probability of getting 60 response out of 500 questionnaires sent
out as part of a sociological study. In other words, we are interested in the
probability of getting x successes in x trials

Characteristic of Binomial Distribution

In a binomial, the following are true:
i. An outcome on each trial of an experiment is either a “success” or
“failure” where the probability of a success is the same for each
trial. There can only be two outcomes.
ii. There is a fixed number of trials n.
iii. The trials are all independent.

The probability of getting x successes in n independent trials is

p(x) = nCx px(1-p)n-x
where P is the constant probability of a success for each trial.

Mean, Variance, and Standard Deviation for a Binomial Probability Distribution

μ=np∨x=np
s2 = np (1− p)
s = √ np(1−p)
For large samples, the man and variance of a binomial probability
distribution can be used to make inference about the sampled population.

2. Poisson Probability Distribution

For probabilities of success p less the 0.05, the probability distribution
could be computed but the calculation could be very tedious especially for a large
n e.g., 100 more. As the probability of success become smaller, the distribution
of the probability of success more and more skewer. The limiting form of
binomial distribution where the probability of success is very small and n is large
is called the Poisson Probability Distribution, named after mathematician Simeon
D. Poisson.
The Poisson distribution is a discrete probability distribution because it is
formed by counting something. It is referred to as “the law of improbable events”
meaning the probability p of a particular event happening is quite small. It
provides a good model for the probability distribution of the number of “rare
event” that occur randomly in time, distance, or space.
 Characteristics of a Poisson random variable:
i. The Poisson Probability Distribution consists of counting the
number, x, of times which a particular events occurs during a
given unit of time, or a given area or volume.
ii. The probability that an event occurs in a given unit of time, area,
or volume is the same for all units.
iii. The number of events occur in one unit of time, area, or volume is
independent of the number that occur in other units

The Poisson probability distribution is describe by

μ x e−μ
P(x) =
x!
where x = number of rare events per unit of time, distance or
space
e = 2.71828
μ = mean value of x

The Mean, Variance, and Standard Deviation of a Poisson Probability

Distribution

Mean: μ
Variance: σ 2=μ
Standard Deviation: σ =√ μ

3. The Normal Distribution

The normal distribution or Gaussian distribution is the most important of all
distributions because it describes the situation in which very large values are
rather rare, very small values are rather rare, but the middle values are rather
common. It is one of the useful models for the population relative frequency
distribution. The normal distribution was proposed by C.F Gauss (1777-1855),
thus this was named Gaussian distribution, a model for the relative frequency
distribution of errors such as errors of measurement. It is defined by the equation

−1
1
2 2
(x− μ) / σ
2
n ( x , μ) = e
σ √2 π
where μ = means
σ = standard deviation
π = 3.14159
e = 2.71828

The normal curve has the following characteristics

 i. The graph has a single peak at the center that occur at the mean
μ. (Mean = Median = Mode)
ii. The graph is symmetrical about the mean μ.
iii. The graph never touches the horizontal axis.
iv. The area under the graph is equal to 1.
P ( μ−σ < x< μ+ σ ) 0.68
P ( μ−2 σ < x < μ+2 σ ) 0.95
P ( μ−3 σ < x < μ+3 σ ) 0.997

The Standardize Normal Curves

x −μ
When the variable x is expressed in terms of standard units ¿ , the
σ
−1
1
2 2
(x−μ ) / σ
2
equation y= e is replaced by the so-called standard form
σ √2 π
−1
1
y= e 2
z2
√2 π
Standardize Normal Distribution
−1
1
The equation y= e 2
z 2 defines z as normally distributed with mean 0
√2 π
(zero) and variance 1
Any normal distribution can be converted into the “standardized normal
distribution” by subtracting the mean μ from each observation x and dividing by
the standard deviation σ .
Application of Areas Under a Normal Curve
There are no social science variables that are normally distributed.
However, there any many variables that have properties close enough to those of
the normal distribution that most properties of the normal distribution apply.
Diverse variable as IQ, height of adult men, the average temperature on Christmas
Day in Luzon, the number of eggs laid by chickens in a month, are all
approximately normally distributed. If it be assumed that a variable is
approximately normally distributed, a number of interesting conclusion about that
variable may be drawn.