THEORY OF PROBABILITY

Lecturer: Nguyen Thi Thu Van

Email: [email protected]

[1] Devore, J. L. and Kenneth, N. B.: Modern Mathematical Statistics with

Applications, the 2nd edition, Springer (2012)
[2] Hassett, M. and Stewart, D.: Probability for Risk Management, the 2nd
edition, ACTEX (2006)
[3] Ross, S.M.: A First Course in Probability, the 9th edition,
Pearson/Prentice Hall (2012)
[4] Study Manual for SOA Exam P, the 10th edition, ACTEX (2015)
 Tentative Plan
Session Topics
1 Combinatorial Analysis
2 The Axioms of Probability
3 Conditional Probability
4 Discrete Variables
5 Commonly Used Discrete Probability Distributions
6 Continuous Variables
7 Commonly Used Continuous Probability Distributions
8 Bivariate Variables
9 Bivariate Probability Distributions
 Assessment Summary

1. Progress Score: 40%

 Class attendance and participation: 10%
• Each student is given 10pts in advance.
• Each absence will be deduced 1.5pts (maximum 3)
• 30 minutes late arrival will be deduced 1pt.
 Progress Exams: 30%
2. Final Exam Score: 60%
 What you need to be successful in the course?

 Read the materials before coming to class.

 Go to class on time.

 Ask questions.

 Work out problems in the textbook which are similar to

those that have been solved in class.

 Be prepared well and ready for midterm and final exams.

 What is Theory of Probability?
 A branch of Mathematics concerned with the analysis of a
random phenomena. Why it is needed?
 The outcome of a random event cannot be determined before it
occurs, but it may be any one of several possible outcomes.

 The actual outcome is considered to be determined by chance.

 Probability is widely used in all sectors in daily life like

sports, weather reports, actuarial science, market share

and many more. Why so?

We often hear questions like
 What are the chances that revenue next month will exceed last
year’s average?

 How likely is it that our new production system will help us

decrease our product defect rate?

 Businesses also want to understand how they can increase the

chance of positive future events (increasing market share) and
decrease the chance of negative future events (failing to meet
forecasted sales.)

Probability allows us to understand and quantify the uncertainty

about the future and use the rules of probability to bridge the gap
between what we know now and what is unknown about the future.
LECTURE 1

Combinatorial Analysis
 Contents

 Introduction to Combinatorial Analysis

 Basic Principle of Counting

 Permutations

 Combinations

 Multinomial Coefficients
Get started by A simple example
 Suppose a communication system:

 Setup: n antennas lined up.

Functional system: when no m = 2

consecutive detective antennas.

 Problem: compute P(functional system)

= the probability of the functional system.

Answer. When 𝑛 = 4. The possible configurations: 0011,

0101, 0110, 1001, 1010, 1100. Therefore, we get 3 among 6,
and thus P(functional system) = ½.
For more complicated problems, we need an effective way to
count, that is Combinatorial Analysis.
Basic Principle of Counting
Basic Principle of Counting.
Suppose 𝑟 experiments to
be performed successively.
• For each outcome of
Experiment 1, 𝑛1 possible
outcomes.
• For each outcome of
Experiment 𝑖, we have
𝑛𝑖+1 outcomes for
Experiment 𝑖 + 1.
Counting: all possible outcomes ς𝑟𝑖=1 𝑛𝑖 = 𝑛1 × 𝑛2 × ⋯ × 𝑛𝑟
 Exercises

Exercise 1. A small community with 10 women and

each woman has 3 children. We have to pick one
pair as mother & child of the year. How many
possibilities?
Exercise 2. Find # possible 7 place license plates if
the first 3 places are letters and the final 4 places
are numbers.
Also, what if no repetition among letters or numbers?
Permutations
Permutations.
• A permutation of n
objects is an ordered
sequence of those n
objects.
• Two permutations
only differ according
to the order of the
objects.

Counting: all permutations 𝑃𝑛 = 𝑛! = 𝑛 × 𝑛 − 1 × ⋯ × 2

We also are interested in ordered arrangements of
some of r elements of a set, this is called an r-
permutation.

Counting: For 1 ≤ 𝑟 ≤ 𝑛, all permutations

𝑛!
𝑃𝑛 𝑟 ≡ 𝑃 𝑛, 𝑟 = 𝑛 × 𝑛 − 1 × ⋯ × 𝑛 − 𝑟 + 1 =
𝑛−𝑟 !
Example. How many ways are there to select a first-prize
winner, a second-prize winner, and a third-prize winner from
100 different people who have entered a contest?
 Exercises
Exercise 1. Suppose that a saleswoman has to visit eight
different cities. She must begin her trip in a specified city, but
she can visit the other seven cities in any order she wishes.
How many possible orders can the saleswoman use when
visiting these cities?
Exercise 2. How many permutations of the letters ABCDEFGH
contain the string ABC?
Exercise 3. In how many ways can we select three students
from a group of five students to stand in line for a picture? In
how many ways can we arrange all five of these students in a
line for a picture?
Combinations
Combinations.
• A combination of 𝑟
objects among 𝑛
objects is non ordered
subset of 𝑟 objects.
• Two combinations
only differ according
to nature of their
objects.
𝑛 𝑛!
Counting: all combinations 𝑛 C𝑟 ≡ 𝐶 𝑛, 𝑟 ≡ 𝑟 = 𝑟! 𝑛−𝑟 !
 Exercises
Exercise 1. We have a group of 5 women and 7 men. We
wish to form a committee with 2 women and 3 men. Find
the number of possibilities.
Also, what if 2 men refuse to serve together?
Exercise 2. How many poker hands of five cards can be
dealt from a standard deck of 52 cards?
Also, how many ways are there to select 47 cards from a
standard deck of 52 cards?
Exercise 3. How many ways are there to select five
players from a 10-member tennis team to make a trip to a
match at another school?
Binomial Theorem. Let 𝑎, 𝑏 ∈ ℝ and 𝑛 ≥ 1. Then
𝑛
𝑛 𝑛 𝑘 𝑛−𝑘
𝑎+𝑏 =෍ 𝑎 𝑏
𝑘
𝑖=1
Example. The coefficient on 𝑥 6 𝑦 8 in the expansion

14 14 14!
of 𝑥 + 𝑦 is =
6 6! 14−6 !

Application of Binomial theorem. Let 𝐴 be a set

with 𝐴 = 𝑛 and 𝑃𝑛 = the collection of all subsets
of 𝐴. Then 𝑃𝐴 = 2𝑛 .
Multinomial Coefficients
Multinomial coefficients. Divisions of n objects into r
groups with size 𝑛1 , 𝑛2 , … , 𝑛𝑟 . We have
• 𝑛 objects and 𝑟 groups.
• We want 𝑛𝑗 objects in group 𝑗 and σ𝑟𝑗=1 𝑛𝑗 = 𝑛.

𝑛 𝑛! 𝑛!
Counting: # divisions 𝑛 , 𝑛 , … , 𝑛 ≡ = ς𝑟
1 2 𝑟 𝑛 !𝑛
1 2 !⋯𝑛 𝑟 ! 𝑗=1 𝑛𝑗 !

Example. A police department with 10 officers and 5 have to

patrol the streets, 2 are permanently working at the station and
3 are on reserve at the station. How many divisions do we get?
Multinomial Theorem. Let 𝑥1 , 𝑥2 , … , 𝑥𝑟 ∈ ℝ and 𝑛 ≥ 1.
Then
𝑛
𝑥1 + 𝑥2 + ⋯ + 𝑥𝑟
𝑛 𝑛1 𝑛2 𝑛𝑟
= ෍ 𝑛1 , 𝑛2 , … , 𝑛𝑟 𝑥1 × 𝑥2 × ⋯ × 𝑥𝑟
𝑛1 ,𝑛2 ,…,𝑛𝑟 ∈ 𝐴𝑟,𝑛

where
𝐴𝑟,𝑛 = 𝑛1 , 𝑛2 , … , 𝑛𝑟 ∈ 𝑁 𝑟 |𝑛1 + 𝑛2 + ⋯ + 𝑛𝑟 = 𝑛
Example. The coefficient on 𝑥 5 𝑦 2 𝑧 7 in the expansion of

14 14 14!
𝑥+𝑦+𝑧 is = = 72,072
5, 2,7 5! 2! 7!
-- The End of Topic --
Thank You!