Unit -1 Mathematical Tools

Introduction to probability
P(A) = Probability of an event, A, occurring
Before we start discussion distributions, let’s take a step back and talk about some basic rules of
probability.
Probability is fundamentally about assigning probabilities to events.
An event can be pretty much anything for which there is an alternative outcome.
Eg) A = { sun rises tomorrow, Supreme Court nominee will be blocked, etc. }

Discrete and Continuous Distributions

Rules of probability
P(AC) = 1 − P(A)
P(AC) Probability of something not happening.
P(A) Probability of something happening.

Probability distributions for discrete and continuous variables

Probability distributions are full distributions of all possible outcomes and probability of those
outcomes occurring.

Recall that discrete variables and variables which take on a finite number of values.

Continuous variables take on a theoretically infinite number of values

Probability distributions for discrete and continuous variables

Discrete probability distributions are probability distributions which assign a probability to each
individual outcome.

■ Continuous probability distributions are probability distributions which assign probabilities to

intervals.

Probability distribution of a discrete variable

Probability distribution of a discrete variable

Children in families = y = {4, 6, 2, 1, 1, 2}

■ The number of children in families is a good example of a discrete variable.

Probability distribution of a discrete variable

Children in families = y = {4, 6, 2, 1, 1, 2}

0 ≤P(y) ≤ 1

P(y) = 1

i=1

P(y = 4) = 1/6, P(y = 6) = 1/6,

P(y = 2) = 2/6,P(y = 1) = 2/6

This is the full probability distribution of y

Probability distribution for continuous variables

Continuous variables have a theoretically infinite continuum of values.

Strangely enough, because of this continuous distributions always assign probabilities to ranges
rather than values

Conditional Probability

If E and F are two events associated with the same sample space of a random
experiment, then the conditional probability of the event E under the condition that
the event F has occurred, written as P (E | F), is given by
P(E  F)
P(E | F)  , P(F)  0
P(F)

Properties of Conditional Probability

Let E and F be events associated with the sample space S of an experiment. Then:
(i) P (S | F) = P (F | F) = 1
(ii) P [(A  B) | F] = P (A | F) + P (B | F) – P [(A  B | F)],
where A and B are any two events associated with S.
(iii) P (E | F) = 1 – P (E | F)

Multiplication Theorem on Probability

Let E and F be two events associated with a sample space of an experiment. Then
P (E  F) = P (E) P (F | E), P (E)  0
= P (F) P (E | F), P (F)  0
If E, F and G are three events associated with a sample space, then
P (E  F  G) = P (E) P (F | E) P (G | E  F)
Independent Events

Let E and F be two events associated with a sample space S. If the probability of
occurrence of one of them is not affected by the occurrence of the other, then we
say that the two events are independent. Thus, two events E and F will be
independent, if
(a) P (F | E) = P (F), provided P (E)  0
(b) P (E | F) = P (E), provided P (F)  0
Using the multiplication theorem on probability, we
have
(c) P (E  F) = P (E) P (F)

Three events A, B and C are said to be mutually independent if all the following
conditions hold:
P (A  B) = P (A) P (B)
P (A  C) = P (A) P (C)
P (B  C) = P (B) P (C)
and P (A  B  C) = P (A) P (B) P (C)

13.1.2 Partition of a Sample Space

A set of events E1, E2,...., En is said to represent a partition of a sample space S if

(a) Ei  Ej = , i  j; i, j = 1, 2, 3,......, n
(b) Ei  E2 ...  E = S, and
(c) Each Ei  , i. e, P (E ) > 0 for all i = 1, 2,..., n

13.1.3 Theorem of Total Probability

Let {E1, E,. . ., En} be a partition of the sample space S. Let A be any event associated
with S, then

P (A) = P(E
j
j )P(A | E j )
Bayes’ Theorem

If E1, E2,..., En are mutually exclusive and exhaustive events associated with a
sample space, and A is any event of non zero probability, then

P(E | A)  P(Ei )P(A | Ei )

i n

 P(E )P(A | E )
i 1
i i

13.1.4 Random Variable and its Probability Distribution

A random variable is a real valued function whose domain is the sample space of a
random experiment.
The probability distribution of a random variable X is the system of numbers

X : x1 x2xn ...
P (X) : p1 pp2 n ...

where pi > 0, i =1, 2,..., n, p

i1
=1

13.1.5 Mean and Variance of a Random Variable

Let X be a random variable assuming values x1, x2,...., xn with probabilities

n
p1, p2, ..., pn, respectively such that pi  0, p i1
i = 1 . Mean of X, denoted by  [or
expected value of X denoted by E (X)] is defined as
n

μ = E (X) =  xi pi
i1

and variance, denoted by 2, is defined as

n n

( – ) p i = x
2
pi – 
2 2
 = i
2
i
i 1
x
i 1
 or equivalently
2 = E (X – )2
Standard deviation of the random variable X is defined as

n
= variance (X) =  (x i – ) 2 p i
i1

13.1.6 Bernoulli Trials

Trials of a random experiment are called Bernoulli trials, if they satisfy the
following conditions:
(i) There should be a finite number of trials
(ii) The trials should be independent
(iii) Each trial has exactly two outcomes: success or failure
(iv) The probability of success (or failure) remains the same in each trial.

13.1.7 Binomial Distribution

A random variable X taking values 0, 1, 2, ..., n is said to have a binomial
distribution with parameters n and p, if its probability distibution is given by
P (X = r) = ncr pr qn–r,
where q = 1 – p and r = 0, 1, 2, ..., n.

13.2 Solved Examples

Short Answer (S. A.)
E x aA and B are two candidates seeking admission in a college. The probability
m p l e 1

that A is selected is 0.7 and the probability that exactly one of them is selected is
0.6. Find the probability that B is selected.
Solution Let p be the probability that B gets selected.
P (Exactly one of A, B is selected) = 0.6 (given)
 P (A is selected, B is not selected; B is selected, A is not selected) = 0.6
 P (AB) + P (A B) = 0.6
  P (A) P (B) + P (A) P (B) = 0.6
 (0.7) (1 – p) + (0.3) p = 0.6
 p = 0.25
Thus the probability that B gets selected is 0.25.
Example 2 The probability of simultaneous occurrence of at least one of two
events A and B is p. If the probability that exactly one of A, B occurs is q, then
prove that P (A) + P (B) = 2 – 2p + q.
Solution Since P (exactly one of A, B occurs) = q (given), we get
P (AB) – P ( AB) = q
 p – P (AB) = q
 P (AB) = p – q
 1 – P (A B) = p – q
 P (A B) = 1 – p + q
 P (A) + P (B) – P (A B) = 1 – p + q
 P (A) + P (B) = (1 – p + q) + P (A  B)
= (1 – p + q) + (1 – P (A  B))
= (1 – p + q) + (1 – p)
= 2 – 2p + q.

Example 3 10% of the bulbs produced in a factory are of red colour and 2% are red
and defective. If one bulb is picked up at random, determine the probability of its
being defective if it is red.
Solution Let A and B be the events that the bulb is red and defective, respectively.
10 1
P (A) = = ,
100 10

P (A  B) 2 1
=
=
100 50
 P (A  B) 1 10 1
P (B | A) =
=  
P (A) 50 1 5
1
Thus the probability of the picked up bulb of its being defective, if it is red, is .
5
Example 4 Two dice are thrown together. Let A be the event ‘getting 6 on the first
die’ and B be the event ‘getting 2 on the second die’. Are the events A and B
independent?

Solution: A = {(6, 1), (6, 2), (6, 3), (6, 4), (6, 5), (6, 6)}

B = {(1, 2), (2, 2), (3, 2), (4, 2), (5, 2), (6, 2)}

A  B = {(6, 2)}

P(A)  1 1
6 1 P(B)  P(A  B) 
 ,
,
36 6 6 36
Events A and B will be independent

if P (A  B) = P (A) P (B)
1 1 1 1
i.e., LHS= P  A  B  , RHS = P  A  P  B    
36 6 6 36
Hence, A and B are independent.
Example 5 A committee of 4 students is selected at random from a group consisting
8 boys and 4 girls. Given that there is at least one girl on the committee, calculate
the probability that there are exactly 2 girls on the committee.
Solution Let A denote the event that at least one girl will be chosen, and B the
event that exactly 2 girls will be chosen. We require P (B | A).

SinceA denotes the event that at least one girl will be chosen, A denotes that no girl
is chosen, i.e., 4 boys are chosen. Then
8
C 70 14
P (A ) 12 4  
C 4 495 99
 14 85
 P (A) 1– 
99 99
8
C . 4C
2 2
Now P (A  B) = P (2 boys and 2 girls) =
12
C4
6 28 56
 495 165

P(A  B) 56 99
Thus P (B | A)  168 P(A) 165  85 425

Example 6 Three machines E1, E2, E3 in a certain factory produce 50%, 25% and
25%, respectively, of the total daily output of electric tubes. It is known that 4% of
the tubes produced one each of machines E1 and E2 are defective, and that 5% of
those produced on E3 are defective. If one tube is picked up at random from a day’s
production, calculate the probability that it is defective.
Solution: Let D be the event that the picked up tube is defective
Let A1 , A2 and A3 be the events that the tube is produced on machines E 1 , E2 and E3,
respectively .
P (D) = P (A1) P (D | A1) + P (A2) P (D | A2) + P (A3) P (D | A3) (1)
50 1 1 1
P (A1) = = , P (A2) = , P (A3) =
100 2 4 4
4
1
Also P (D | A1) = P (D | A2) = =
100 25
5 1
P (D | A3) = = .
100 20
Putting these values in (1), we
get
1
1 1 1 1 1
P (D) = × + × + ×
2 25 4 25 4 20
1
1 17
1
+ =
= + 100 80 = .0425
50 400
Example 7 Find the probability that in 10 throws of a fair die a score which is a
multiple of 3 will be obtained in at least 8 of the throws.
Solution Here success is a score which is a multiple of 3 i.e., 3 or 6.
2 1
Therefore, p (3 or 6) = 
6 3
The probability of r successes in 10 throws is given by
r
 1
10– r
P (r) = 10Cr   2
 
3 
 
3
Now P (at least 8 successes) = P (8) + P (9) + P (10)

Example 8 A discrete random variable X has the following probability distribution:

X 1 2 3 4 5 6 7
P (X) C 2C 2C 3C 2 2C2 7C2 + C
C
Find the value of C. Also find the mean of the distribution.
Solution Since  pi = 1, we have
C + 2C + 2C + 3C + C2 + 2C2 + 7C2 + C = 1
i.e., 10C2 + 9C – 1 = 0
i.e. (10C – 1) (C + 1) = 0

1
 C= , C = –1
10
1
Therefore, the permissible value of C = (Why?)
10
 n 7
Mean =  xi = xp i i
pi i1

i1

2
1 2 2 3 1 2
1  1 2 1
 
 1  2   3  4   5    6  2  77   
   10  10 


10 10


10
 

10  10 
 

 10 
 

1 4 6 12 5 12 49 7
 10  10  10  10  100  100  100  10
= 3.66.
Long Answer (L.A.)
Example 9 Four balls are to be drawn without replacement from a box containing
8 red and 4 white balls. If X denotes the number of red ball drawn, find the
probability distribution of X.
Solution Since 4 balls have to be drawn, therefore, X can take the values 0, 1, 2, 3, 4.
P (X = 0) = P (no red ball) = P (4 white balls)
4
C 1
 12
4

C4 495

P (X = 1) = P (1 red ball and 3 white balls)

8
C  4C 32
1 3
 12 
C4 495
P (X = 2) = P (2 red balls and 2 white balls)
8
C  4C 168
 2
12
2

C4 495
P (X = 3) = P (3 red balls and 1 white ball)
8
C  4C 224
3 1
 12 
C4 495
 P (X = 4) = P (4 red balls) 
8
C 70
12
C
4
 495 .
4

Thus the following is the required probability distribution of X

X 0 1 2 3 4
1 32 168 224 70
P (X) 495 495 495 495 495

Example 10 Determine variance and standard deviation of the number of heads in

three tosses of a coin.
Solution Let X denote the number of heads tossed. So, X can take the values 0, 1, 2,
3. When a coin is tossed three times, we get
Sample space S = {HHH, HHT, HTH, HTT, THH, THT, TTH, TTT}
1
P (X = 0) = P (no head) = P (TTT) =
8
3
P (X = 1) = P (one head) = P (HTT, THT, TTH) =
8
3
P (X = 2) = P (two heads) = P (HHT, HTH, THH) =
8
1
P (X = 3) = P (three heads) = P (HHH) =
8
Thus the probability distribution of X is:
X 0 1 2 3
1 3 3 1
P (X)
8 8 8 8
Variance of X = 2 =  x2 pi –i 2, (1)
where  is the mean of X given by
1 3 3 1
=x p = 0 1  2   3 
i i
8 8 8 8
 3
= (2)
Now 2
2 1 2 3 2 3 2 1
 x2 p = 0  1   2   3   (3)
3
i i
8 8 8 8
From (1), (2) and (3), we get
2
 3
3
2 = 3 –   
2  4
3
Standard deviation   3
2 .
 4 2
Example 11 Refer to Example 6. Calculate the probability that the defective tube was
produced on machine E1.
Solution Now, we have to find P (A1 / D).

P (A1  D) P (A1 ) P (D /
A1 ) P (D)
P (A1 / D)
=
P (D)

1 1
2 25  8
= 17 17 .
400
Example 12 A car manufacturing factory has two plants, X and Y. Plant X
manufactures 70% of cars and plant Y manufactures 30%. 80% of the cars at plant
X and 90% of the cars at plant Y are rated of standard quality. A car is chosen at
random and is found to be of standard quality. What is the probability that it has
come from plant X?
Solution Let E be the event that the car is of standard quality. Let B 1 and B2 be the
events that the car is manufactured in plants X and Y, respectively. Now
70 7 30 3
P (B ) =  , P (B ) = 
1
100 10 2
100 10
P (E | B1) = Probability that a standard quality car is manufactured in plant
 80 8
= 100 10
90 9
P (E | B ) = 
2
100 10
P (B1 | E) = Probability that a standard quality car has come from plant X

P (B ) × P (E | B )
 P (B ) . P (E | B1 ) + P (B ) . P1 (E | B )
1 1 2 2

7 8
 56
 10 10 
7 8 3 9 83
10 10 10 10
56
Hence the required probability is .
83

Objective Type Questions

Choose the correct answer from the given four options in each of the Examples 13 to
17. Example 13 Let A and B be two events. If P (A) = 0.2, P (B) = 0.4, P (AB) =
0.6, then P (A | B) is equal to
(A) 0.8 (B) 0.5 (C) 0.3 (D) 0
Solution The correct answer is (D). From the given data P (A) + P (B) = P (AB).
P (A  B)
This shows that P (AB) = 0. Thus P (A | B) = 0.
= P
(B)
Example 14 Let A and B be two events such that P (A) = 0.6, P (B) = 0.2, and
P (A | B) = 0.5.
Then P (A | B) equals
1 3 3 6
(A)
(B) (C) (D)
10 10 8 7
Solution The correct answer is (C). P (AB) = P (A | B) P (B)
= 0.5 × 0.2 = 0.1
 P (A  B ) P[(A  B )] 1– P  A  B
P (A | B) =  
P (B) P(B ) 1– P(B)

1– P (A) – P (B) + P (A
 B) 3
= = .
1– 0.2 8
Example 15 If A and B are independent events such that 0 < P (A) < 1 and
0 < P (B) < 1, then which of the following is not correct?
(A) A and B are mutually exclusive (B) A and B are independent
(C) A and B are independent (D) A and B are independent
Solution The correct answer is (A).
Example 16 Let X be a discrete random variable. The probability distribution of X
is given below:
X 30 10 – 10
1 3 1
P (X)
5 10 2
Then E (X) is equal to
(A) 6 (B) 4 (C) 3 (D) – 5
Solution The correct answer is (B).
1 3 1
E (X) = 30 10 –10  4 .
5 10 2
Example 17 Let X be a discrete random variable assuming values x1, x2, ..., xn with
probabilities p1, p2, ..., pn, respectively. Then variance of X is given by
(A) E (X2) (B) E (X2) + E (X) (C) E (X2) – [E (X)]2
(D) 2
E (X ) – [E (X)]
2

SolutionThe correct answer is (C).

Fill in the blanks in Examples 18 and 19

Example 18 If A and B are independent events such that P (A) = p, P (B) = 2p and
5
P (Exactly one of A, B) = , then p =
9
 1 5 5
Solution p = , 
1–p2 p   p 1 – 2 p  3 p – 4 p2 
3 12 9





Example 19 If A and B are independent events then P (A B) = 1 –

Solution P (A B) = 1 – P (AB) = 1 – P (A) P (B)
(since A and B are independent).

State whether each of the statement in Examples 20 to 22 is True or False

Example 20 Let A and B be two independent events. Then P (AB) = P (A) + P

(B)
Solution False, because P (AB) = P (A) . P(B) when events A and B are independent.
Example 21 Three events A, B and C are said to be independent if P (ABC) =
P (A) P (B) P (C).
Solution False. Reason is that A, B, C will be independent if they are pairwise
independent and P (ABC) = P (A) P (B) P (C).
Example 22 One of the condition of Bernoulli trials is that the trials are independent
of each other.
Solution:True.

EXERCIS
13.3
E Short
Answer (S.A.)
1. For a loaded die, the probabilities of outcomes are given as
under: P(1) = P(2) = 0.2, P(3) = P(5) = P(6) = 0.1 and P(4) = 0.3.
The die is thrown two times. Let A and B be the events, ‘same number each
time’, and ‘a total score is 10 or more’, respectively. Determine whether or
not A and B are independent.
2. Refer to Exercise 1 above. If the die were fair, determine whether or not the
events A and B are independent.
3. The probability that at least one of the two events A and B occurs is 0.6. If A
and B occur simultaneously with probability 0.3, evaluate P( A ) + P( B ).
4. A bag contains 5 red marbles and 3 black marbles. Three marbles are drawn
one by one without replacement. What is the probability that at least one of
the three marbles drawn be black, if the first marble is red?
5. Two dice are thrown together and the total score is noted. The events E, F and
G are ‘a total of 4’, ‘a total of 9 or more’, and ‘a total divisible by 5’,
respectively. Calculate P(E), P(F) and P(G) and decide which pairs of events,
if any, are independent.
6. Explain why the experiment of tossing a coin three times is said to have
binomial distribution.
1 1 1
7. A and B are two events such that P(A) = , P(B) = and P(A  B)= .
2 3 4
Find :
(i) P(A|B) (ii) P(B|A) (iii) P(A'|B) (iv) P(A'|B')
2 1 1
8. Three events A, B and C have , and
5 3 , respectively. Given
probabilities 2
1 1
that P(A  C) = and P(B  C) = , find the values of P(C | B) and P(A'  C').
5 4
9. Let E1 and E2 be two independent events such that p(E1) = p1 and P(E2) = p2.
Describe in words of the events whose probabilities are:
(i) p1 p2 (ii) (1–p1) p2 (iii) 1–(1–p1)(1–p2) (iv) p1 + p2 – 2p1p2

10. A discrete random variable X has the probability distribution given as below:
X 0.5 1 1.5 2
P(X) k 2 2k2 k
k
(i) Find the value of k
(ii) Determine the mean of the distribution.
11. Prove that
(i) P(A) = P(A  B) + P(A  B )
(ii) P(A  B) = P(A  B) + P(A  B ) + P( A  B)

12. If X is the number of tails in three tosses of a coin, determine the standard
deviation of X.

13. In a dice game, a player pays a stake of Re1 for each throw of a die. She
receives Rs 5 if the die shows a 3, Rs 2 if the die shows a 1 or 6, and nothing
 otherwise. What is the player’s expected profit per throw over a long series of
throws?

14. Three dice are thrown at the sametime. Find the probability of getting three
two’s, if it is known that the sum of the numbers on the dice was six.

15. Suppose 10,000 tickets are sold in a lottery each for Re 1. First prize is of
Rs 3000 and the second prize is of Rs. 2000. There are three third prizes of Rs.
500 each. If you buy one ticket, what is your expectation.

16. A bag contains 4 white and 5 black balls. Another bag contains 9 white and 7
black balls. A ball is transferred from the first bag to the second and then a
ball is drawn at random from the second bag. Find the probability that the ball
drawn is white.

17. Bag I contains 3 black and 2 white balls, Bag II contains 2 black and 4 white
balls. A bag and a ball is selected at random. Determine the probability of
selecting a black ball.

18. A box has 5 blue and 4 red balls. One ball is drawn at random and not
replaced. Its colour is also not noted. Then another ball is drawn at random.
What is the probability of second ball being blue?

19. Four cards are successively drawn without replacement from a deck of 52
playing cards. What is the probability that all the four cards are kings?

20. A die is thrown 5 times. Find the probability that an odd number will come up
exactly three times.

21. Ten coins are tossed. What is the probability of getting at least 8 heads?
22. The probability of a man hitting a target is 0.25. He shoots 7 times. What is
the probability of his hitting at least twice?
23. A lot of 100 watches is known to have 10 defective watches. If 8 watches are
selected (one by one with replacement) at random, what is the probability that
there will be at least one defective watch?
24. Consider the probability distribution of a random variable X:

X 0 1 2 3 4
P(X) 0.1 0.25 0.3 0.2 0.15

X
Calculate (i) V
   (ii) Variance of X.
2
 
25. The probability distribution of a random variable X is given below:

X 0 1 2 3
k k k
P(X) k
2 4 8

(i) Determine the value of k.

(ii) Determine P(X  2) and P(X > 2)
(iii) Find P(X  2) + P (X > 2).

26. For the following probability distribution determine standard deviation of the
random variable X.
X 2 3 4
P(X) 0.2 0.5 0.3
1
27. A biased die is such that P(4) = and other scores being equally likely. The die
10
is tossed twice. If X is the ‘number of fours seen’, find the variance of the
random variable X.

28. A die is thrown three times. Let X be ‘the number of twos seen’. Find the
expectation of X.
1
29. Two biased dice are thrown together. For the first die P(6) = , the other scores
2
2
being equally likely while for the second die, P(1) and the other scores are
= 5
 equally likely. Find the probability distribution of ‘the number of ones seen’.

30. Two probability distributions of the discrete random variable X and Y are
given below.
X 0 1 2 3 Y 0 1 2 3
1 2 1 1 1 3 2 1
P(X) P(Y)
5 5 5 5 5 10 5 1
0
Prove that E(Y2) = 2 E(X).
1
31. A factory produces bulbs. The probability that any one bulb is defective is
and they are packed in boxes of 10. From a single box, find the
50
probability that
(i) none of the bulbs is defective
(ii) exactly two bulbs are defective
(iii) more than 8 bulbs work properly

32. Suppose you have two coins which appear identical in your pocket. You
know that one is fair and one is 2-headed. If you take one out, toss it and get
a head, what is the probability that it was a fair coin?
33. Suppose that 6% of the people with blood group O are left handed and 10%
of those with other blood groups are left handed 30% of the people have
blood group O. If a left handed person is selected at random, what is the
probability that he/she will have blood group O?
34. Two natural numbers r, s are drawn one at a time, without replacement from
the set S= 1 , 2 , 3 , ...., n . Find P  r  p|s  p , where pS.
35. Find the probability distribution of the maximum of the two scores obtained
when a die is thrown twice. Determine also the mean of the distribution.
36. The random variable X can take only the values 0, 1, 2. Given that P(X = 0)
= P (X = 1) = p and that E(X2) = E[X], find the value of p.
 37. Find the variance of the distribution:
x 0 1 2 3 4 5
1 5 2 1 1 1
P(x)
6 18 9 6 9 18

38. A and B throw a pair of dice alternately. A wins the game if he gets a total of 6 and B
wins if she gets a total of 7. It A starts the game, find the probability of winning the game
by A in third throw of the pair of dice.
39. Two dice are tossed. Find whether the following two events A and B are independent:
A = (x, y) : x+y=11 B = (x, y) : x  5
where (x, y) denotes a typical sample point.
40. An urn contains m white and n black balls. A ball is drawn at random and is put back into
the urn along with k additional balls of the same colour as that of the ball drawn. A ball is
again drawn at random. Show that the probability of drawing a white ball now does not
depend on k.
Long Answer (L.A.)
41. Three bags contain a number of red and white balls as follows: Bag 1 : 3
red balls, Bag 2 : 2 red balls and 1 white ball
Bag 3 : 3 white balls.
i
The probability that bag i will be chosen and a ball is selected from it is ,
6
i = 1, 2, 3. What is the probability that
(i) a red ball will be selected? (ii) a white ball is selected?
42. Refer to Question 41 above. If a white ball is selected, what is the probability that it came
from
(i) Bag 2 (ii) Bag 3

Expectation and Variance

The expected value (or mean) of X, where X is a discrete random variable, is a weighted average of
the possible values that X can take, each value being weighted according to the probability of that
event occurring. The expected value of X is usually written as E(X) or m.
 E(X) = S x P(X = x)
So the expected value is the sum of: [(each of the possible outcomes) × (the probability of the
outcome occurring)].
In more concrete terms, the expectation is what you would expect the outcome of an experiment to
be on average.
Example
What is the expected value when we roll a fair die?
There are six possible outcomes: 1, 2, 3, 4, 5, 6. Each of these has a probability of 1/6 of occurring.
Let X represent the outcome of the experiment.
Therefore P(X = 1) = 1/6 (this means that the probability that the outcome of the experiment is 1 is
1/6)
P(X = 2) = 1/6 (the probability that you throw a 2 is 1/6)

P(X = 3) = 1/6 (the probability that you throw a 3 is 1/6)

P(X = 4) = 1/6 (the probability that you throw a 4 is 1/6)

P(X = 5) = 1/6 (the probability that you throw a 5 is 1/6)

P(X = 6) = 1/6 (the probability that you throw a 6 is 1/6)

E(X) = 1×P(X = 1) + 2×P(X = 2) + 3×P(X = 3) + 4×P(X=4) + 5×P(X=5) + 6×P(X=6)
Therefore E(X) = 1/6 + 2/6 + 3/6 + 4/6 + 5/6 + 6/6 = 7/2
So the expectation is 3.5 . If you think about it, 3.5 is halfway between the possible values the die
can take and so this is what you should have expected.
Expected Value of a Function of X
To find E[ f(X) ], where f(X) is a function of X, use the following formula:
 E[ f(X) ] = S f(x)P(X = x)
Example
For the above experiment (with the die), calculate E(X2)
Using our notation above, f(x) = x2
f(1) = 1, f(2) = 4, f(3) = 9, f(4) = 16, f(5) = 25, f(6) = 36

P(X = 1) = 1/6, P(X = 2) = 1/6, etc

So E(X2) = 1/6 + 4/6 + 9/6 + 16/6 + 25/6 + 36/6 = 91/6 = 15.167
The expected value of a constant is just the constant, so for example E(1) = 1. Multiplying a random
variable by a constant multiplies the expected value by that constant, so E[2X] = 2E[X].
A useful formula, where a and b are constants, is:
 E[aX + b] = aE[X] + b
[This says that expectation is a linear operator].
Variance
The variance of a random variable tells us something about the spread of the possible values of the
variable. For a discrete random variable X, the variance of X is written as Var(X).
 Var(X) = E[ (X – m)2 ] where m is the expected value E(X)
This can also be written as:
 Var(X) = E(X2) – m2
The standard deviation of X is the square root of Var(X).
Note that the variance does not behave in the same way as expectation when we multiply and add
constants to random variables. In fact:
 Var[aX + b] = a2Var(X)
You is because: Var[aX + b] = E[ (aX + b)2 ] - (E [aX + b])2 .
= E[ a2X2 + 2abX + b2] - (aE(X) + b)2

= a2E(X2) + 2abE(X) + b2 - a2E2(X) - 2abE(X) - b2

= a2E(X2) - a2E2(X) = a2Var(X)

Binomial Random variable
 The binomial random variable is defined as the number of successes
in n Bernoulli trials, where the probability of success, p, is constant for all
 trials and the trials are independent. A Bernoulli trial is an experiment with
two outcomes, which can represent success or failure, an up move or a down
move, or another binary (two-fold) outcome.
 A binomial random variable has an expected value or mean equal to np and
variance equal to np(1 − p).
 A binomial tree is the graphical representation of a model of asset price
dynamics in which, at each period, the asset moves up with probability p or
down with probability (1 − p). The binomial tree is a flexible method for
modeling asset price movement and is widely used in pricing options
Normal distribution variable
.
 The normal distribution is a continuous symmetric probability distribution that
is completely described by two parameters: its mean, μ, and its variance, σ2.
 A univariate distribution specifies the probabilities for a single random
variable. A multivariate distribution specifies the probabilities for a group of
related random variables.
 To specify the normal distribution for a portfolio when its component
securities are normally distributed, we need the means, standard deviations,
and all the distinct pairwise correlations of the securities. When we have those
statistics, we have also specified a multivariate normal distribution for the
securities.
 For a normal random variable, approximately 68 percent of all possible
outcomes are within a one standard deviation interval about the mean,
approximately 95 percent are within a two standard deviation interval about
the mean, and approximately 99 percent are within a three standard deviation
interval about the mean.
 A normal random variable, X, is standardized using the expression Z = (X −
μ)/σ, where μ and σ are the mean and standard deviation of X.Generally, we
use the sample mean ¯¯¯X as an estimate of μ and the sample standard
deviation sas an estimate of σ in this expression.
 The standard normal random variable, denoted Z, has a mean equal to 0 and
variance equal to 1. All questions about any normal random variable can be
answered by referring to the cumulative distribution function of a standard
normal random variable, denoted N(x) or N(z).
 A random variable follows a lognormal distribution if the natural logarithm of the
random variable is normally distributed. The lognormal distribution is defined in
terms of the mean and variance of its associated normal distribution. The
lognormal distribution is bounded below by 0 and skewed to the right (it has a long
right tail).
 The lognormal distribution is frequently used to model the probability distribution
of asset prices because it is bounded below by zero.
 Continuous compounding views time as essentially continuous or unbroken;
discrete compounding views time as advancing in discrete finite intervals.
 PROBABILITY DISTRIBUTIONS

While dealing with random variables and their probabilities it is often found that there exists a
functional relationship between the value taken by the random variable and the corresponding
probability. This initiates to express the relation between random variables and their probabilities whit
the help of mathematical functions. These functions are called as probability distributions. Depending
on the nature of the random variable distributions can de either discrete or continuous. If the random
variable X takes discrete values only, then its probability distribution is called a discrete probability
distribution or probability mass function (pmf). However if the random variable X, is such that it can
take any value within a given interval them the corresponding distribution is called as continuous
probability distribution or probability density function (pdf). Binomial distribution, Poisson
distribution, geometric distribution and negative binomial distribution are some examples of discrete
random variable. Examples of continuous distribution are normal distribution, beta distribution,
gamma distribution etc.

Bernoullian Trial
A particular trial having only two outcomes either success or failure in which the probability
of success is constant is called as Bernoullian trial. The sample space of a Bernoullian trial has only
two sample points, S = {success, failure}. Some examples of Bernoullian trials are:
(a) A toss of a single coin (head or tail)
(b) The throw of a die (even or odd)
(c) Result of a student in an examination (pass or fail)
(d) The selection of items produced in an industry (defective or nondefective)

Bernoulli’s Distribution
Let us define a random variable X, which represents the result of a Bernoullian trial. Thus, X
takes only two values.
Let, X = 1, if the result of the trial is a success.
= 0, if the trial results to failure.
Let p be the probability of success. So, we have, X takes the value 1 with probability p and 0 with
probability q. Accordingly, we have,

X 0 1
P(X = x) q p

This can be written functionally as

P(X = x) = px (1p)1 x, x = 0, 1 which is called the Bernoulli’s distribution. This is also termed as
the point Binomial distribution.

Constants of Bernoulli’s Distribution

Let us now calculate the mean and variance of the distribution.
1 1
We know, Mean = E(X) =  xP( X
i0
 x)  xp x (1  p)1x 0  p 0 (1  p)10  1 p1 (1  p)11
i0
=p
1 1
2
Now, E(X ) = x
i0
2
P( X  x)  x 2 p x (1  p)1x 1 p1 (1  p)11  p
i0
V(X) = E(X2)  [E(X)]2 = p  p2 = p(1p)
Thus, Mean = p and Variance = p(1p) = pq, where, q = 1p
Binomial Distribution

Binomial distribution was discovered by James Bernoulli (16541705) in the year 1700. But
it was published in the year 1713.
Let a random experiment having only two outcomes either success or failure, be performed a
number of times (n, say) under identical conditions. Let X be the random variable that represents the
number of successes in n trials, with ‘p’ the probability of success which remains constant for each
time the random experiment is performed. Thus, ‘q =1-p’ is the probability of failure in any trial.
Under the above conditions the random variable X is said to follow binomial distribution if its
probability mass function is given by

P(X=x) = nCx px qnx, x=0,1,…,n. and 0  p  1, q= 1 p

where n and p or q are the parameters of the binomial distribution.

The binomial distribution is a discrete distribution as the random variable can take only the
integral values i.e. 0,1,2,…,n. so, the probability function of the binomial distribution is also called as
probability mass function (p.m.f). To notation used to denote that a random variable X follows
binomial distribution with parameters n and p is X ~ B(n, p).

Mean and Variance of Binomial Distribution

n n
Mean = E(X) = x P[ X=x] =  x nCx px qnx
x0 x0
 0. q n  1.n C pq n  1  2.n C p 2 q n  2  3.n C p 3 q n  3 ...n. pn
1 n(n  1) 2 n2 2 n(n  1)(n3 2) 3 n  3
 1. npq n  1  2. p q  3. p q ...n. pn
2 3!
n  1 2 n  2 n(n  1)(n  2) 3 n  3
 npq  n(n  1) p q  p q ...n. pn
2!
(n  1)(n  2) 2 n  3
 np(q n  1  (n  1) pq n  2  p q ... pn  1)
2!
 np(q n  1  n  1C pq n  2  n  1C p 2 q n  3 ... pn  1)
1 2
 np(q  p)n  1  np (1) Since, p + q = 1

So, we have
E(X) = np
(2)
Variance = E(X2)  (E(X))2
Now,
n n n
E(X2) =  x 2 P( X  x)   x  2 n
x
x
p q nx
  [x(x  1)  x]nC x p x q n x
x0 x0
C
x0
n
n x n x
n
n n! n x
n x n x x
=  x(x  Cx p q   Cx p q  x(x  1) p q  np [using (1)]
1) x x0 x!(n  x)!
x0 x0
n
n(n  1)  (n  2)!
x n x
=  x(x  1) p  np
x0
x(x  1)  (x  2)!(n  x)!
q
n
2 (n  2)!
x2 n x 2 2
= n(n  1)
p x2
  np  n(n  1) ( p  q)  np
p

= n(n  1) p2 + np [since, p+q = 1]

 Thus, E(X2) = n(n-1) p2 + np (3)

Replacing the values of (1) and (3) in (2), we have

Variance = E(X2)  (E(X))2

= n(n-1) p2 + np – (np)2 = n2p2 – np2 + np – n2p2 = np(1-p) = npq

Thus, mean of binomial distribution is np and variance is npq.

Properties of Binomial Distribution

1. The binomial distribution is a discrete distribution where the random variable X takes the values
0,1,2,…,n
2. The binomial distribution has two parameters n and p or q.
3. The mean of the binomial distribution is np and variance is npq . So standard deviation is npq
4. The mean is greater than the variance.
5. Skewness and kurtosis of binomial distribution are (qp)/ npq
and (16pq) /npq respectively.
6. The binomial distribution may have either one or two modes.
7. The binomial distribution is a symmetrical distribution if p = q = ½. Otherwise it is a skewed
distribution.
8. The distribution is said to be mesokurtic if pq = 1/6
9. The binomial distribution may be obtained as a limiting case of Hypergeometric distribution.
10. If X follows binomial distribution with parameters n1 and p and Y follows binomial distribution
with parameters n2 and p , then X+Y follows binomial distribution with parameters n1+n2 and p.
This property is known as additive property of binomial distribution.
Applications of Binomial Distribution

Binomial Distribution is used to determine the probability of 

 occurrence of heads or tails when a number of coins are tossed.
 number of males or females in a given population
 number of defective or nondefective items in a production process
 number of successes or failures of a gambler in a particular game which is repeated a number
of times.
 SOLVED ILLUSTRATIONS (BINOMIAL DISTRIBUTION)
Illustration 1: Five fair coins are tossed. Find the probability of (i) Exactly three heads. (ii) Atleast
three heads.

Solution: In a fair coin we have probability of a head to occur = ½

Let X be a random variable that denotes the number of heads that occurs when five coins are tossed.
Here, n = no of coins tossed = 5
So using the binomial distribution we have,

P [Exactly three heads] = P[X = 3] = 5C3 ( ½ )3 (1 - ½)5  3

1
= 54  1.( )2 = 5/16
2 8 2
P [Atleast three heads] = P[X = 3 or X = 4 or X = 5]

= P[X = 3] + P[ X = 4] + P[ X = 5]

= 5
C3 ( ½ )3 (1 - ½)5  3 + 5C4 ( ½ )4 (1 - ½)5  4 + 5C5 ( ½ )5 (1 - ½)5  5
1
= 54  1.( )2 + 5  1 .  1
1. 10 . 5. 1 . 16 . 1.
+ = + 32 + 32 = =
2
2 8 16 2 32 32 32
2
Illustration 2: The mean of a binomial distribution is 6 and the standard deviation is given by (3/2).
Find the distribution.

Solution: We, know that for a binomial distribution with parameters n and p. We have mean = np
and Variance = npq
Also, Variance = (Standard Deviation)2 = 3/2
Thus, np = 6 and npq = 3/2
Now, q = npq/np = (3/2)/6 = ¼
p = 1 – q = 1- ¼ = ¾
Also, np = 6
n¾=6
n=8
So, the required distribution is
P(X=x) = 8Cx ( ¾)x ( ¼ ) n  x where x = 0,1,2,…,n

Illustration 3: A random variable X follows binomial distribution with mean 5/3 and P( X=2 ) = P (X
= 1). Find variance, P(X = at least 1) and P(X = at most 1).

Solution: Let n and p be the parameters of the distribution. Thus, we have

P(X=x) = nCx px qn  x where x = 0,1,2,…,n and p + q =1
By the question, we have
Mean = np = 5/3 (1)
And
P( X=2 ) = P (X = 1)
n 2 n2 n 1 n1
 C2 p q = C1 p q
n(n  1) 2 n2 n1
 p q  npq
2!
  ( n – 1) p = 2 q
 np–p =2q
 5/3 – p = 2 q [ Using (1)]
5–3p=6q
 6q + 3 p = 5
 6 (1– p) + 3 p = 5
 –3 p = –1
 p = 1/3 (2)
So, q = 1-p =1 - 1/3 = 2/3
Putting (2) in (1) we have,
n=5
Now, variance of the distribution = npq = 5 (1/3)(2/3) = 10/9
P( X= at least 1) = P( X  1)
= 1 – P( X  0) = 1 – P(X = 0) [ Since, X cannot be less than zero
= 1 – 5C0 (1/3)0 (2/3)5 = 1- (2/3)5 = 211/243
P(X = at most 1) = P( X=0 ) + P( X=1 )
= (2/3)5 + 5C1 (1/3)1 (2/3)4
= (32/243) + 5 (16/243)= (32+80)/243= 112/253

Illustration 4: The chances of a bomb hitting a target to that it will not are 3:2. Find the probability
that the target will hit atleast once in five shots.

Solution: Let X be a random variable which represents the number of shots required to hit a target out
of five shots.
By the question we have, n = 5, p = 3/5 and q = 1– p = 1 – (3/5) = 2/5
Now,
P( The target is hit atleast once in 5 shots) = P (X  1)
= 1 – P( X  0) = 1 – P(X = 0) [ Since, X cannot be less than zero
= 1 – 5C0 (3/5)0 (2/5)5 = 1- (2/5)5 = 3093/3125

Poisson Distribution

Poisson distribution was discovered by Simeon Denis Poisson (17811840) and it was
published in the year 1837. A random variable X is said to follow Poisson distribution if it assumes
only nonnegative values and if its probability mass function is given by


e x
P(X = x) = , x = 0,1,2,…,  and  > 
x!
W re  is the parameter of the Poisson distribution.
he

Mean and Variance of Poisson Distribution

x 1
Properties of Poisson Distribution
1. The Poisson distribution is a discrete distribution where the random variable X takes the values
0,1,2,… 
2. The Poisson distribution has one parameter i.e., .
3. The mean and variance of the Poisson distribution are equal that is, mean = variance =  .
4. The standard deviation is equal to .
5. Skewness and kurtosis of Poisson distribution are 1/ and 1/ respectively.
6. The Poisson distribution may have either one or two modes.
7. The Poisson distribution is a positively skewed distribution as 1/ is always positive.
8. The distribution is said to be leptokurtic as 1/ is always positive.
9. The Poisson distribution may be obtained as a limiting case of Binomial distribution.
10. If X and Y are two independent Poisson variates with parameters 1 and 2 then X+Y is also
a Poisson variate with parameter 1 + 2.

Applications of Poisson Distribution

Poisson Distribution can be used in the following cases 

 Number of cars passing through a certain point per minute during a busy hour of the day.
 Number of suicides reported per week in a particular town.
 Number of printing mistakes per page of a standard book.
 Number of persons born blind per year in a particular village.
 SOLVED ILLUSTRATIONS (POISSON DISTRIBUTION)

Illustration 1: Find the mean of a Poisson distribution such that we have

P(X = 2) = P(X = 1).

Solution: From the recurrence relation of the Poisson distribution we have


P(X = x+1) = P( X = x)
x 1
So, putting x = 1 in the above expression, we have


P(X = 2) = P( X = 1)
2
 1=  /2 Since, P( X = 2) = P( X = 1)
=2
Thus, the mean of the Poisson distribution is 2.

Illustration 2: In a Poisson distribution we have the probability that X takes the value 0 is 0.1. Find
the mean of the distribution.

Solution: We know that the mean of the Poisson distribution is equal to its parameter .
Now,
So, putting x = 0 we have

P (X = 0 ) =

 0.1 = e   e  = 10   = log e 10

  = 2.3026 (obtained from table)

Thus the mean of the Poisson Distribution is 2.3026.

Illustration 3: In a factory manufacturing blades it is found that on an average 2% of the blades are
defective. What is the probability that atmost 5 defective blades will be found in a box of 200 blades.

Solution: Here, we have

n = total number of blades = 200
p = probability of a defective blade = 2/100 = 0.02
Thus,  = n p = 200  0.02 = 4
Let X be the random variable which represents the number of defective blades in a packet of 200
blades.
Thus, by the question we are to find the probability of X  5.
So, P( X  5)
= P(X = 0) + P(X = 1) + P(X = 2) + P(X = 3) + P(X = 4) + P(X = 5)
5
  
= 0.0183 ( 1 + 4 + 8 + 10.6667+ 10.6667+ 8.5333)
= 0.785
Thus, required probability is 0.785

Illustration 4: Vijay Lodge, of Guwahati has three rooms only. The number of demands for a room
is Poisson distributed variate with mean 1.5. Calculate the proportion of days on which (i) neither
room is demanded (ii) some demand for rooms are refused because of non-availability of rooms.

Solution: Let X be the random variable which represents the number of demands made for rooms. So
the proportion of days on which there are x demands for rooms is given by,

 1.5 x
P[ x demands for rooms ] = P[ X = x ] = e = e 1.5 [since, mean = 1.5]
 x x!
x!

(i) The proportion of days in which neither room is demanded is

1.5 0
e 1.5 = e1.5 = 0.223
P[ X = 0 ] =
0!

(ii) The proportion of days in which some demands are refused

P [ X>3 ] = 1 – P[ X3 ]
= 1 – {P[ X=0 ] + P[ X=1 ] + P[ X=2 ] + P[ X=3 ] }
 e1.5 1.5
 e
1.5
1.5 e
2 1.5 3
1.5 e
1.5

=1–   
 0! 1!



2! 3!
–1.5 2 3
=1–e { 1 + 1.5 + (1.5) /2! + (1.5) /3! }

= 1 – 0.2231  4.1873 = 1 – 0.9342 = 0.0657

Normal Distribution

The Normal distribution also called as the Gaussian distribution, is a continuous probability
distribution with two parameters and  and is defined by the probability density function (p.d.f.)
2
1  x 
1 
 
P[ X = x ] = 2  
e
2

where, -  < x <  and -  < x < ,  > 0

Here  is the mean and  is the standard deviation of the distribution.  and e are two
mathematical constants having the approximate values 22/7 and 2.718 respectively.
The history of the distribution is very interesting. It was discovered by an English
Mathematician De-Moivre in 1733, used by Laplace, later in the year 1774 but the credit of the
distribution was wrongly attributed to Gauss, who first made the reference of the distribution in 1809
to study the errors in the measurement of Astronomy.
This is the most useful distribution in theoretical statistics because of its many important
characteristics. Most of the probability distributions of statistics whether discrete or continuous tends
to normal distribution especially when the number of observations are large. The probability curve of
normal distribution is known as Normal Curve. The curve is symmetrical about its mean (), bell-
shaped and the two tails extend to infinitely on either side.

If a random variable X is normally distributed with mean  and standard deviation , then the
random variable Z = (X-)/ is called as the “standard normal variate” and the corresponding
distribution the standard normal distribution . It has the density function
1
p( Z=z ) = 
z
2
2 where, -  < z < 
e
2

This is actually a special case of normal distribution with mean 0 and standard deviation 1.

Area under Normal Probability Curve

As in all continuous probability distributions, the total area under the normal curve is 1. For a
continuous distribution we cannot calculate the probability at a point but we can calculate probability
with in a range. The probability that X lies between c and d, denoted by P(c  X  d), is given by the
area under the curve between the vertical lines at c and d. This is also equal to the area under
‘Standard normal curve’ between the vertical lines at the standardized values of c and d; i.e.
P(c  X  d) = Area under ‘standard normal curve’ between the vertical lines at c and d.
Where c = (c— )/ and d’ = (d — )/. Extensive tables showing the areas under standard normal
curve are available in this book (see Statistical Tables).
The cumulative distribution function (c.d.f.) of standard normal distribution, viz.
(z) = Probability that the standard normal variable takes a value less than or equal to z.
= Area under ‘standard normal curve’ to the left of the ordinate at z.
Mathematically,
z z2
(z) = 1 

 dz
2

e
 2

The values of  (z) are given in statistical tables only for positive values of z. For, negative values the
relation
 ( z) = 1   (z)
is used to find the area, because of the symmetry of standard normal curve about 0.
Probability Integral of Standard Normal Distribution

Fig.1: Area between z =   and z = a

(Area between z =   and z =  a )

Thus, probabilities of normal distribution can be calculated by using the relation,

P(c  X  d) = (d’)  (c’),
 where c and d are the standardized values of c and d.

Properties of Normal Distribution

The normal distribution has the following properties:
1. The Normal Distribution has two parameters  the mean of the distribution and  the standard
deviation of the distribution.
2. Normal distribution is a symmetrical distribution with mean = median = mode
3. The quartiles are equidistant from the median,
i.e. Q3  Q2 = Q2  Q1
4. All the odd order moments are equal to 0.
5. The coefficient of skewness 1 = 0 and coefficient of kurtosis 2 = 0.
6. The graph of the normal distribution is called the normal curve. It is a bell shaped curve and
is symmetrical about the mean.
7. The linear combination of independent normal variates is also a normal variate.
8. The mean deviation about mean of the normal distributi4on is th of the standard deviation.
5
9. For the normal distribution QD: MD: SD : : 10 : 12 : 15
10. The area under the normal curve can be distributed in the following manner:

Importance of Normal Distribution

Normal distribution plays a very important role in statistical theory and its application becomes useful
for the following reasons:
1. Most of the distribution occurring in practice, for example binomial, Poisson,
hypergeometric distribution are approximated by Normal Distribution.
2. Even if a variable is not normally distributed it can sometimes be brought to normal form
by simple transformation of variable.
3. Many of the distributions of sample statistics tend to normality and as such they can be
best studied with the help of normal curve.
4. The proof of all the test of significance in sampling are based upon the fundamental
assumption that the population from which the sample has been drawn is normal.
5. The theory of normal curve can be applied to the graduation of the curves, which are not normal.
6. Normal distribution is extensively used in statistical quality control.
Note
1. If X follows binomial distribution with parameters n and p then the conditions under
which binomial distribution tends to normal distribution are:
(i) The number of trials (n) is infinitely large, i.e. n  
(ii) Neither p nor q is very small.
2. If X follows Poisson distribution with parameter  then the conditions under which Poisson
distribution tends to normal distribution is that the mean of the distribution i.e.   .
 SOLVED ILLUSTRATIONS (NORMAL DISTRIBUTION)
Illustration 1: The mean weight of 500 male students at a certain college is 151 lbs. and the standard
deviation is 15 lbs. Assuming that the weights are normally distributed, find how many students
weight (i) between 120 and 155 lbs., (ii) more than 155 lbs.
[Given (0.27) = 0.6064 and  (2.07) = 0.9808, where (t) denotes the area under standard normal
curve to the left of the ordinate at t.]

Solution: The mean  and the standard deviation  are  = 151 lbs.,  = l5 lbs.
(i) Proportion of students whose weights lie between 120 & 155 lbs. = Area under standard normal
curve between the vertical lines at the standardized values,
viz. z = (120 151)/15 =  2.07 and z = (155  151)/15 = 0.27.
P(120  x  155)
=  (0.27)   ( 2.07)
=  (0.27)  [1  (2.07)]
= 0.6064  1 + 0.9808 = 0.5872 [see Figure].

Thus, the number of students whose weights lie

between 120 and 155 lbs. is therefore 0.5872  500 =
294 (approx.)

(ii) Proportion of students who weigh more than 155 lbs. is

P(x > 155)
= 1  P(x  155)
= 1  (0.27)
= 1  0.6064
= 0.3936
The number of students who are expected to weigh more than
155 lbs is 0.3936  500 = 197 (approx.)

Illustration 2: Let X be a random variable which follows

normal distribution with mean 30 and S.D 5. Find the probability that
(i) 26  X  40 (ii) X  45 (iii) | X – 30 | > 5

Solution: Here, the mean  and the standard deviation  are 30 and 5 respectively.
(i) When X = 26 we have Z = (X - )/  = ( 26 – 30)/ 5 = -0.8
and when X = 40 we have Z = (X - )/  = ( 40 – 30)/ 5 = 2
P (26  X  40)
= P (-0.8  X  2)
= P (-0.8  X  0) + P (0  X  2)
= P (0  X  0.8) + P (0  X  2)
[ from symmetry
= 0.2881+ 0.4772
[ from table
= 0. 7653

(ii) When X = 45,

We have,
Z = (X - )/  = ( 45 – 30)/ 5 = 3
Thus, P( X  45) =P( Z  3) = 1 P( Z 3 )
= 1 [ P(   Z 0 ) + P( 0  Z 3 )]
= 1 [ 0.5 + 0.49865] = 0.00135

(iii) To find P ( | X  30|  5 ) we proceed in the

following way,
P ( | X  30|  5 )
= P (5 X  30 5 )
= P (25  X  35 )
= P (1 Z  1)
= 2  P ( 0 Z  1)
= 2  0.3413
= 0.6826
Thus, P ( | X  30|  5 ) = 1 P ( | X  30|  5 ) = 10.6826 = 0.3174

Illustration 3. In a distribution exactly normal, 7% of the items are under 35 and 89% are under 63.
What are the mean and Standard deviation of the distribution?

Solution: Let X be a random variable following normal distribution with mean  and standard
deviation . Let Z = (X )/.
By, the question we have,
P[ X  35 ] = 0.07 and P[ X  63 ] = 0.89,
Now, P[ X  35 ] = P[(X )/ (35 )/]
= P[ Z  (35 )/] =  [(35 )/]
Thus,
 [(35 )/] = 0.07
= 1   (1.48) [ value obtained from table.
=  (1.48)
Thus, (35 )/ = 1.48
      (1)
Similarly,
P[ X  63 ] = P[(X )/  (63 )/]
= P[ Z  (63 )/] =  [(63 )/]
Thus,
 [(63 )/] = 0.89
=  (1.23) [ value obtained from table.

Thus, (63 )/ = 1.23

  + 23   63 (2)
Now, (1)  (2) implies,
    
(-)  + 23   63

 2.71  28
  10.33
Putting the value of   10.33 in (1) we have
   +  = 35 + 15.2884 = 50.2884
Thus, for the random variable X the mean is 50.2884 and standard deviation is 10.33.

Illustration 4: There are six hundred Economics students in the postgraduate classes of a university
 and the probability for any student to need a copy of a particular book from the university library on
any day is 005. How many copies of the book should be kept in the university library so that the
probability may be greater than 090 that none of the students needing a copy from the library has to
come back disappointed? (Use normal approximation to the binomial distribution).

Solution: We are given:

n = 600, p = 0.05,  = np =600  0.05 = 30
2 = npq = 600 0.05 0.95 =28.5
 2 = (28.5) =5.3
We want x in such a way that
P (X < x) > 0.90
 P( Z<z ) > 0.90 [Here, z = (x30)/5.3
 P( 0 < Z < z ) > 0.4
 z > 1.28 (From Normal Probability Tables
 (x30)/5.3 > 1.28
 x > 30 + 1.28  5.3
 x > 36.784  37
Hence the university library should keep at least 37 copies of the book.

Formulae
Distribution Type Functional Form Range of Range of Mean Variance
Variable Parameter
Bernoulli Discrete px(1p)1x x= 0, 1 0p1 p pq
Binomial Discrete n x nx x = 0, 1, 2,…,n 0p1 np npq
Cx p q
x= 0, 1, 2,… >0
Poisson Discrete e   x  
x!
1  x 
2 <x< <<
Normal Continuous 1   
>0 
e 2   2
2
 EXERCISES

1. Explain the concept of probability distributions. How does probability mass function differ
from probability density function?
2. Let X be a random variable with p.m.f. f(x) = (1 / 32) 5C2, where x = 0, 1, 2,....5. Find the mean
and standard deviation of the random variable.
[ Ans: 5/2 and 5/2]
3. Define Binomia1 distribution and state the conditions under which the distribution holds.
4. Derive the mean and variance of binomial distribution.
5. Obtain the recurrence relation for the probabilities of binomial distribution.
6. Four coins are tossed simultaneously. What is the probability of getting 2 heads and 2 tails?
[ Ans: 3/8 ]
7. Find the probability that in a family of 5 children there will be (i) at least one boy, (ii) at least one
boy and one girl. (Assume that the probability of a female birth is 1/2). [ Ans: (i) 31/32 (ii)
15/16]
8. In a shooting competition, the probability of a man hitting a target is 1/5. If he fires 5 times,
what is the probability of hitting the target at least twice? [ Ans: 821/3125]
9. Assume that on the average 30% of the candidates appearing in an examination from a certain
college get First Division. What is the probability that out of a group of 4 such candidates not
more than two will fail to get a First Division? [ Ans: 0.3483]
10.For a binomial distribution, the mean is 3 and the variance is 2. Find the values of n and p. Hence
find the probability that X (the variable value) is 5. [Ans: 9, 1/3, 224/2187]
11.For a binomial distribution, the mean and S.D. are respectively 4 and calculate the probability of
getting a nonzero value from this distribution. . [ Ans: 1  (0.75)10]
12.Write down the expressions which define Binomial, Poisson and Normal probability distributions.
Give 3 physical situations illustrating a Poisson random variable.
13. Derive the mean and variance of Poisson distribution.
14. State and prove the recurrence relation of probabilities of a Poisson variate.
15. State the conditions under which binomial distribution tends to Poisson distribution. Derive the
same.
16. State some examples of binomial distribution and Poisson distribution.
17. A random variable x follows Poisson distribution with parameter m = 2. Find the probabilities
P(x = 1), P(x 1), P(x < 1), P(x > 1), P(1  x  3). Given e-2 = 0.1353.
[ Ans: 0.2706, 0.4059, 0.1353, 0.5941, 0.7216]
18. The standard deviation of a Poisson distribution is 2. Find the probability that x =3. (Given e4 =
.0183).
[ Ans: 0.1952]
19.Is it possible that a Poisson distribution has the same mean and standard deviation? If so, what is
the probability that the variable takes the value zero? [ Ans: yes, e1]
20. For a Poisson distribution, Pr(x=0) Pr(x= 1). Find Pr(x>0). [Ans: 1 e1]
21. A discrete random variable x follows Poisson distribution such that P(x= 1) = P(x= 2). Find
the mean and variance of the distribution. [Ans: 2, 2]
22.The probability that a Poisson variate X takes a positive value is (1e2). Find the (i) Mean, (ii)
Mode, (iii) probability that X lies between 1 and 1.5. [ Ans: 2,1 and 3e2
23. If 3% of the bolts manufactured by a company are defective, what is the probability that in a
sample of 200 bolts, 5 will be defective? (Given e6 = 0.00248).
[ Ans: 0.16
24.Suppose that the number of telephone calls an operator receives from 11.00 am. to 11.05 a.m.
follows a Poisson distribution with m = 3. (i) Find the probability that the operator will receive no
calls in that time interval to-morrow. (ii) Find the probability that in the next 3 days the operator
will receive a total of 1 call in that time interval. (e = 2.7 18). [ Ans: 0.05, 0.0011]
25.The average number of misprints per page of a book is 2. Assuming Poisson distribution, what is
the probability that a particular page is free from misprints? if the book contains 1000 pages, how
many of the pages contain more than 2 misprints’? [ Ans: e2, 1000(1 5e2)]
 26. State the importance of Normal distribution in statistics.
27. Explain some of the features of normal distribution.
28. Find the areas under the normal curve (i.e., the probabilities) in the following cases using
table:
(i) between z = 0 and z = 1.8;
(ii) between z =  0.78 and z = 0;
(iii) between z = 0.85 and z= 2.15;
where z is a standard normal variate. [Ans: (i) 0.4641, (ii) 0.2823, (iii)
0.1819]
29. The mean height of 1000 students at a certain college is 165 cms. and SD is 10 cms.
Assuming that the height distribution is normal, find the number of students whose heights
are (i) less than 172 cms; (ii) between 159 and 178 cms; and (iii) more
than 173.2 cms. [Ans: (i) 258; (ii) 629; (iii) 2061]
30.The mean of a normal distribution is 60 and 6% of the values are greater than 70.
Find the standard deviation of this distribution. (Given that the area under the
standard normal curve between z = 0 and z=
1.56 is 0.44 or z =   to 1.56 = 0.94]
[ Ans. 6.41]

INDEPENDENCE, COVARIANCE AND CORRELATION

Independence: For random variables X and Y, the intuitive idea behind "Y is
independent of X" is that the distribution of Y shouldn't depend on what X is. This
can be
expressed in terms of the conditional pdf's to say "f(y|x) doesn't depend on x."
Caution: "Y is not independent of X" means simply that the distribution of X may
vary as
Y varies. It doesn't mean that X depends on Y.
If Y is independent of X, then:
1. μx = E(Y|X = x) does not depend on x.

Exercise: The converse of this last statement is true. That is: If the joint distribution of X and Y is the
product of the marginal distributions of X and Y, then Y is independent of X.

Note that the condition fy(y)f(x) = f(x,y) is symmetric in X and Y. Thus (3) and its converse imply
that: Y is independent of X if and only if X is independent of Y. So it makes sense to say "X and Y are
independent."

Putting this all together, have: The following conditions are all equivalent:

i. X and Y are independent.

ii. Fxy(x,y) = fy(y)fx(x)

iii. The conditional distribution of Y|X = x is independent of x

iv. The conditional distribution of X|Y = y is independent of y.

v. f(y x) = f(y) for all y.

vi. f(xy) = f(x) for all x.

Additional property of independent random variables: If X and Y are independent, then E(XY) =
E(X)E(Y). (The proof of this fact will be assigned as homework for October 8.)

Covariance: The covariance of two random variables X and Y is defined as Cov(X,Y) = E([X - E(X)]
[Y - E(Y)])

Comments:

The capital C in Cov is consistent with the notation used in this class of capitalising items that relate
to the population, and using lower case (or a "hat") for items referring to a sample. There is a related
notion of covariance for a sample, discussed briefly later. Consistent with general terminology, Cov is
a parameter since it refers to the population, and the sample covariance (cov or Cov-hat) is a statistic
since it is calculated from the sample.

Compare and contrast with the definition of Var(X).

If X and Y both tend to be on the same side of their respective means (i.e., both greater than or both
less than their means), then [X - E(X)][Y - E(Y)] tends to be positive, so Cov(X, Y) is positive.
Similarly, if X and Y tend to be on opposite sides of their respective means, then Cov(X,Y) is
negative. If there is no trend of either sort, then Cov(X,Y) should be zero. Thus covariance roughly
measures the extent of a "positive" or "negative" trend in the joint distribution of X and Y.

Conditional expectation

Conditional expectation is a fundamental concept in probability theory and

statistics that provides the expected value of a random variable given that certain
conditions are known

Definition
If XX and YY are random variables, the conditional expectation of YY given XX,
denoted E[Y∣X]E[Y∣X], is the expected value of YY when XX is known. Mathematically, it
can be expressed as:
where fY∣X(y∣x)fY∣X(y∣x) is the conditional probability density function
of YY given X=xX=x.
Example
Consider a simple example where we have two random variables, XX and YY.
Suppose XX can take values 0 or 1, and given XX, YY follows a normal distribution with
different means and variances. Specifically,
let: Y∣X=0∼N(2,1)Y∣X=0∼N(2,1) Y∣X=1∼N(5,1)Y∣X=1∼N(5,1)
To find the conditional expectation E[Y∣X]E[Y∣X], we use the fact that the expectation of a
normal distribution N(μ,σ2)N(μ,σ2) is μμ: E[Y∣X=0]=2E[Y∣X=0]=2 E[Y∣X=1]=5E[Y∣X=1]=

Application
Conditional expectation is used in various fields, including:
 1. Finance: To model the expected return on an asset given certain market conditions.
2. Insurance: To estimate the expected claim amount given the policyholder's
characteristics.
3. Machine Learning: In algorithms like the Expectation-Maximization (EM)
algorithm, where conditional expectations are used to estimate missing data.
4. Econometrics: For regression models to understand the expected value of the
dependent variable given certain values of the independent variables.
Calculation Example
Suppose we have the following data for XX and YY:
 XX = [0, 1, 0, 1, 0]
 YY = [1.8, 5.2, 2.1, 4.9, 2.0]
We want to calculate E[Y∣X]E[Y∣X] for X=0X=0 and X=1X=1.
For X=0X=0: E[Y∣X=0]=1.8+2.1+2.03=1.967E[Y∣X=0]=31.8+2.1+2.0=1.967
For X=1X=1: E[Y∣X=1]=5.2+4.92=5.05E[Y∣X=1]=25.2+4.9=5.05
These calculations give the expected values of YY given XX is 0 or 1

What are Sample Statistics?

While calculating statistics for an entire population would typically be ideal, this may not
always be possible due to time and/or money constraints. To remedy this, sample statistics
can be calculated to represent the whole population. Sample statistics are any number
computed from data that represents the sample. For instance, a scientist studying reproductive
success in a species of birds may not be able to count the number of eggs in all 500 nests at
their study site in order to include the whole population.

Sample Mean
One sample statistic is the sample mean, which is represented by the letter x with a bar over
it (pronounced ''x bar''). The sample mean is representative of the population mean,
represented by the Greek letter, μ (mu). The equation for the sample mean is found below.
In this equation, x bar represents the sample mean, X1 and X2 represents the first and second
measurement, Xnrepresents the nth measurement, and n represents the total number of
measurements.
Data fitting
Data fitting, also known as curve fitting, is the process of constructing a mathematical
function that best describes the relationship between a set of observed data points. The goal is
to find a model that closely approximates the underlying pattern in the data. This process
typically involves:
1. Selecting a Model: Choosing a mathematical model (such as linear, polynomial,
exponential, etc.) that is believed to best represent the relationship between the
variables.

1. Parameter Estimation: Determining the parameters of the chosen model that result
in the best fit to the data. This is often done using optimization techniques that
minimize the difference between the observed data and the values predicted by the
model.
 2. Evaluation: Assessing the quality of the fit using statistical metrics, such as R-
squared, root mean square error (RMSE), or residual analysis, to ensure the model
adequately captures the underlying data trends.
Data fitting is widely used in various fields, including statistics, engineering, economics, and
the natural sciences, for tasks such as trend analysis, forecasting, and hypothesis testing.
Example of Data Fitting
Suppose you have a dataset that includes the number of hours studied and the corresponding
scores on a test for a group of students:
Hours Studied Test Score
1 50
2 55
3 65
4 70
5 80
You want to find a mathematical relationship between hours studied and test scores. A simple
linear model might be appropriate, expressed as:
Test Score=a⋅(Hours Studied)+bTest Score=a⋅(Hours Studied)+b
Using data fitting techniques, you can determine the parameters aa (slope) and bb (intercept)
that best fit the observed data.
Application of Data Fitting
1. Predicting Test Scores: By fitting a linear model to the data, you can predict the test
scores for any given number of hours studied. For example, if the model is:
Test Score=10⋅(Hours Studied)+40Test Score=10⋅(Hours Studied)+40
You can predict that a student who studies for 6 hours will score:
Test Score=10⋅6+40=100Test Score=10⋅6+40=100
2. Quality Control in Manufacturing: In a manufacturing process, data fitting can be
used to model the relationship between process parameters (e.g., temperature,
pressure) and product quality. By understanding this relationship, manufacturers can
adjust process parameters to optimize quality and reduce defects.
3. Economics and Finance: Economists and financial analysts often use data fitting to
model and forecast economic indicators or stock prices. For example, they might fit a
model to historical GDP data to forecast future economic growth.
4. Medicine: In medical research, data fitting is used to model the relationship between
drug dosage and patient response. This helps in determining the optimal dosage that
maximizes therapeutic effects while minimizing side effects.
5. Environmental Science: Scientists use data fitting to model environmental
phenomena, such as the relationship between carbon dioxide emissions and global
temperature rise. This helps in predicting future climate changes and assessing the
impact of policy measures.