Random Variables and Discrete

Probability Distributions

Random Variable- is a rule that assigns a

number to each outcome of a chance
experiment. (x)

Example:
A fair coin is tossed three times and the
sequences of Head (H) and Tails (T) are
observed.
List the outcomes of the experiment.

Coin H T H
T H T
H T H T H T H T
H H H H T T T T

H H T T H H T T

H T H T H T H T

Expected value of random variable: E(x)

or the expected value of a random
variable should not confuse with its most
probable value.
= E(x)= x P(x=x)

Example:

1. In a game of chance a man is paid

50 if he gets all heads or tails when
3 coins are tossed and he pays 30 if
either 1 or 2 heads show. What is his
expected gain?

X= gain
2
X= 50 (HHH, TTH ) 8

X= -30 (HHT,THH,HTH,HTT,TTH,THT)
6
8

50 -
x
3
0
2 6
P(x= 8 8
x)

=x-P (x=x)
2 30 6
= 50 ( 8 )+( 1 )( 8 )
100 180
= 8 - 8
80
= 8

= -10
2. Suppose Linda is working in an
insurance company and she sells a
100,000 one year term in insurance
policy at an annual premium of
29,000 actuarial table show that the
probability of death during the next
year for Lindas customer whose age,
sex, health, etc. is 0.001. What is the
expected gain (amount of the money
made by the company) for a policy of
this type?

X- Gain
Customers death- 0.001
Customers lives- 0.999

Gain (x) Sample point P

(x=x)
29,000 Customers lives
0.999
-71,000 Customers Death
0.001

= x. P(x=x)
= 29,000 (0.999) + (-71,000) (0.001)
= 28,971 71
= 28,900
The Binomial Distribution

A binomial experiment is a probability

experiment that satisfies the following
four requirements.
1. Each trial has two possible
outcomes or the outcomes can be
reduced to two outcomes only. These
outcomes can be considered as either
success or failure.
2. It has a fixed number of trials.
3. The outcomes of each trial must
be independent of each other.
4. The probability of a success is the
same in each trial.

A binomial random variable x is defined

as the number of success achieved in
the trials of a binomial experiment.
A binomial distribution show the
probabilities of the possible values of
x.
P(x=x) = n

Remarks
 X Success
n-x Failures
n no. of trials
q 1-p
p probability of success in
each trial

1. A coin is tossed three times. What

is the probability of getting two
head?
1
N=3; x=2; n-x; n-x=1; P= 2
n!
P (x=2) = x ! ( nx ) ! px= (1P)n1

3! 1 1
= 2 ! (1) !
( )
2 (1- 2 )
3 x 2x 1 1 1
= 2x1 ( 4 )( 2 )
3 1
= 1 ( 8 )
3
= 8

Fractions
Proper Fractions: The numerator is less
than the denominator
1 3 2
Examples: 3 , 4 , 7
Improper Fractions: The numerator is
greater than (or equal to) the
denominator
4 11 7
Examples: 3 , 4 , 7

Mixed Fractions: A whole number and

proper fraction
Together.

Example of Proper Fractions:

2
3 , 1
4 , 1
2 , 3
8 , 3
5

Example of Improper Fractions:

4
2 , 3
2 , 3
3
,
16
15
,
99
5

Example of Addition Similar Fractions:

3
8 + 3
8 = 6
8 = 3
4

4 3 7
12 + 12 = 12
Example of Addition Dissimilar Fractions:

3
4 + 2
8 = 6 +2
8 = 8
8 or 1 2
12 +
3 4+ 9 13
8 = 24 = 24

Example of Subtraction Similar

Fractions:

24
35 - 12
35 = 12
35
12
25 - 7
15 = 5
15

1
or 3