Chapter 4 Problems and Solutions
Basic Business Statistics
12th Edition
Chapter 5 Discrete Probability Distributions
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
Chap 5-1
Learning Objectives
In this chapter, you learn: The properties of a probability distribution To compute the expected value and variance of a probability distribution To calculate the covariance and understand its use in finance To compute probabilities from binomial, hypergeometric, and Poisson distributions How to use the binomial, hypergeometric, and Poisson distributions to solve business problems
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
Chap 5-2
Definitions Random Variables
A random variable represents a possible numerical value from an uncertain event. Discrete random variables produce outcomes that come from a counting process (e.g. number of classes you are taking). Continuous random variables produce outcomes that come from a measurement (e.g. your annual salary, or your weight).
Chap 5-3
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
Definitions Random Variables
Random Variables Ch. 5
Discrete Random Variable Continuous Random Variable
Ch. 6
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
Chap 5-4
Probability Distributions
Probability Distributions Ch. 5 Discrete Probability Distributions Continuous Probability Distributions Ch. 6
Binomial
Poisson Hypergeometric
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
Normal
Uniform Exponential
Chap 5-5
Binomial Probability Distribution
A fixed number of observations, n
e.g., 15 tosses of a coin; ten light bulbs taken from a warehouse
Each observation is categorized as to whether or not the “event of interest” occurred
e.g., head or tail in each toss of a coin; defective or not defective light bulb Since these two categories are mutually exclusive and
12th Edition
Chapter 5 Discrete Probability Distributions
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
Chap 5-1
Learning Objectives
In this chapter, you learn: The properties of a probability distribution To compute the expected value and variance of a probability distribution To calculate the covariance and understand its use in finance To compute probabilities from binomial, hypergeometric, and Poisson distributions How to use the binomial, hypergeometric, and Poisson distributions to solve business problems
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
Chap 5-2
Definitions Random Variables
A random variable represents a possible numerical value from an uncertain event. Discrete random variables produce outcomes that come from a counting process (e.g. number of classes you are taking). Continuous random variables produce outcomes that come from a measurement (e.g. your annual salary, or your weight).
Chap 5-3
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
Definitions Random Variables
Random Variables Ch. 5
Discrete Random Variable Continuous Random Variable
Ch. 6
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
Chap 5-4
Probability Distributions
Probability Distributions Ch. 5 Discrete Probability Distributions Continuous Probability Distributions Ch. 6
Binomial
Poisson Hypergeometric
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall
Normal
Uniform Exponential
Chap 5-5
Binomial Probability Distribution
A fixed number of observations, n
e.g., 15 tosses of a coin; ten light bulbs taken from a warehouse
Each observation is categorized as to whether or not the “event of interest” occurred
e.g., head or tail in each toss of a coin; defective or not defective light bulb Since these two categories are mutually exclusive and