Random Variables

A random variable is a numerical description of the outcome of an experiment. Suppose that

to each point of a sample space we assign a number. We then have a function defined on the
sample space. This function is called a random variable (or stochastic variable) or more
precisely a random function (stochastic function). It is usually denoted by a capital letter such
as X or Y. We can mathematically define a random variable in any one of the following ways:
Definition
(i) A random variable (stochastic variable) X is a real valued function defined over the
sample space of a random experiment such that probability of X less than or equal to ‘k’ is
defined for every real number ‘k’.
(ii) It can also be defined as a measurable function defined the sample space of a random
experiment.
(iii) A random variable (r.v.) is a variable defined on the sample space of a random
experiment whose value is a numerical outcome of a random experiment.
Examples
X = Number of sales calls a salesperson makes in one day.
X = Hours spent on sales calls in one day
Types of Random Variables

Generally speaking random variables are either discrete or continuous. A random

variable is said to be discrete if it can assume only finite or countable infinite number of
values. For example, if the random variable is the number of defective tires in a group of 10
tires, the variable under consideration is a discrete random variable because it can take only
values of 0 or 1 or 2 or 3 or . . . 10 (i.e., we cannot have 1.7 or 2.2 defective tires). Another
example

X = Number of sales calls a salesperson makes in one day.

A random variable is said to be continuous if it can assume any value in an interval

or union of intervals. For example, if a random variable is the weight of an item, which may
weigh from 5 to 7 ounces, the random variable weight is a continuous random variable
because it can take any value in the interval of 5 to 7 ounces (such as, 5.1, 6.22, etc.). In the
continuous case, the set of possible outcomes is always infinite. Therefore, it is not possible
to list the sample space by individual values in any form. Another example is

X = Hours spent on sales calls in one day

 The way to distinguish between discrete and continuous is to ask whether the
values of the random variable can be counted. The outcomes of continuous random
variables are measured rather than counted (e.g., the weight of an individual, or the length of
a bolt).

Probability Distribution is a listing of all the outcomes of an experiment and the

probability associated with each outcome. It is a description of how the probabilities are
distributed over the values the random variable can assume. There are two types of
probability distributions. If the associated random variable is discrete, we have a
discrete probability distribution and if the associated random variable is continuous, we
have a continuous probability distribution.

Discrete Probability Distributions

Probability distribution is a description of how the probabilities of a discrete random
variable are distributed over various values of the random variable by means of a
probability function denoted by f(x) or P(x). Let X be a discrete random variable, and
suppose that the possible values that it can assume are given by x1, x2, x3, . . . , arranged in
some order. Suppose also that these values are assumed with probabilities given by
P(X = xk) = f (xk) or P (xk) k = 1, 2, . . . (1)
The probability density function (p.d.f) or a probability mass function (p.m.f), also referred
to as probability distribution is defined as P(x) or f(x)= P(X = x) (2)
This means that for x = xk, this reduces to (1) while for other values of x, f (x) = 0.
In other words, the probability distribution of a discrete random variable X lists the values
and their probabilities

Properties of a discrete probability density function

1. f (x) ≥ 0
2. ∑ 𝒇(𝒙) = 𝟏 , where the sum in (2) is taken over all possible values of x.
3. P(a ≤ X ≤ a+b) = ∑𝑎≤𝑥≤𝑎+𝑏 𝑓(𝑥)= P(xa)+P(xa+1) + ... + P(xa+b)

Example-1:Suppose that a coin is tossed twice so that the sample space is S = {HH, HT, TH,
TT}. Let X represent the number of heads that can come up.
The possible values of X are 0,1,2
With each sample point we can associate a number for X as shown in Table below. Thus, for
example, in the case of HH (i.e., 2 heads), X = 2 while for TH (1 head), X = 1.
Sample
point HH HT TH TT
X 2 1 1 0

1 1 1 1
P(HH)= 4 , P(HT)= 4 , P(TH)= 4 , P(TT) = 4
1
=> P(X=0) = P(TT)= ,
4
1 1 1
P(X=1) = P(HT UTH)=P(HT)+P(TH)= +4 = 2,
4
1
P(X=2) = P(HH)= 4
The following is the pdf of the number of heads when a coin is tossed two times
x 0 1 2
f(x) or P(x) 1/4 1/2 1/4

Example-2 : Continuing the above example, we can find the probabilities associated with X
by considering the probabilities associated with the outcomes in the sample space. Since we
assume the coin is fair, each outcome in the sample space is equally likely to occur.
Therefore, we may represent the probability distribution of X in the following table:

x 𝑓(𝑥) = 𝑃(𝑋 = 𝑥)
0 0.25
1 0.50
2 0.25
The conditions above translate into saying that every number in the second column must be
between 0 and 1, and the sum of the second column must be 1.

Example-3: Consider a random experiment with only two possible outcomes (for example
coin tossing). Let us denote one of them as success and the other(s) as failure. Let p be the
probability of success and q or 1-p as the probability of failure. We denote X=1 if the
outcome is a success and X=0 if the outcome is a failure. Let the random variable X as the
outcome of the above random experiment. Write down the probability density function of X

Answer
P(X=1) =P(1) = p
P(X=0) =P(0) = q
This can be combined as P(x) = 𝒑𝒙 𝒒𝟏−𝒙 for x=0,1
Example-4:The random experiment described in example 3 is repeated a success appears.
The random variable X is the number of trials required to get the first success. Write
down the probability distribution of X
Answer

P(x)= P(X=x)= the probability of first x-1 failures and then a success.

P(x) =𝑞 ∗ 𝑞 ∗ 𝑞 … ∗ 𝑝

= 𝑞 𝑥−1 𝑝 , x=1,2,3, ….
Example-4:A bag contains 6 white and 4 red balls. Four balls are drawn at random from the
bag. If X is the number of white balls among the four balls drawn, what is the probability
distribution of X
Answer
Let P(x) be the pdf of x.
(𝟔𝑪𝒙 )(𝟒𝑪𝟒−𝒙 )
P(x) = (𝟏𝟎𝑪𝟒 )
, x=0,1,2,3,4
Example-5: Given the following probability distribution
(1) Find c, (2) Find P( X ≥ 5) (3) P( X < 3) (4) if P (X≤ k) > 1/2, find the minimum value of
k, (5) Determine the distribution function of x.
X :0 1 2 3 4 5 6 7
P(X) :0 c 2c 2c 3c c2 2c2 7c2+c
Answer
(1) Since P(X) is a pdf, ∑ 𝑃(𝑋) = 1
=> c+2c+2c+3c+c2+2c2+7c2+c = 1
10c2+9c =1
=>10c2 +9c-1 =0.
This is of the form ax2+bx+C=0, where a=10, b=9, C=-1. Solution to this quadratic equation
is
−𝑏 ± √𝑏 2 − 4𝑎𝐶
𝑐=
2𝑎
−9±√81−4∗10∗−1 −9±√81+40 −9±√121 −9±11 1
Substituting we get c= = = = =10 or -1
2∗10 2∗10 2∗10 20
Hence we get c=1/10 or c =-1. Since probability is always positive we cannot accept the
1
value -1. Since P(X) ≥ 0 c= 10 . Now the pdf is;
X :0 1 2 3 4 5 6 7
P(X) :0 1/10 2/10 2/10 3/10 1/100 2/100 17/100
1 2 17 20
(2) P( X ≥ 5) =P(5)+P(6)+P(7) =100 + 100 + 100 = = 1/5
100
(3) P(X < 3) =P(0)+P(1)+(2) = 3/10
(4) P(X ≤ 4) =8/10 > 1/2, minimum value of k=4

(5) Distribution function F(x) = 0 if x <1

=1/10 if 1≤ x <2
= 3/10 if 2≤ x <3
= 5/10 if 3 ≤ x <4
=8/10 if 4≤x <5
 =81/100 if 5≤ x <6
= 83/100 if 6 ≤ x <7
=1 if x ≥ 7

Example-6:Consider a random variable X whose probability mass function (pmf) is given by

P(x) = p if x = −1.9
=0.1 if x = −0.1
=0.3 if x = 2
=p if x = 3
=4p if x = 4
=0 otherwise.
(a) What is p? (b) What is P(2)? (c) Write the distribution function F(x)

(a) Since P(x) is a probability mass function ∑ 𝑓(𝑥) = 1

=> p+0.1+0.3+p+4p+ = 1

=> 0.4+6p =1

=> 6p = 0.6

=> Therefore, p =0.1

The pmf is f(x) = 0.1 if x= -1.9

=0.1 if x= -0.1
=0.3 if x= 2
=0.1 if x= 3
=0.4 if x=4
=0 elsewhere
(b) f(2) =P( X =2) = 0.3

(c) The distribution function F(x) =P( X≤ x) given by

F(x) =0 if x < -1.9

=0.1 if -1.9≤ x < -0.1

=0.2 if -0.1≤ x < 2

= 0.5 if 2≤ x < 3

= 0.6 if 3≤ x < 4

=1 if x ≥ 4
 Distribution function
of X
1
F(x) ->

0.5

0
-4 -2 0 2 4 6
X->

Continuous Probability Distributions

Probability distribution (continuous) is a description of how the probabilities of a continuous
random variable are distributed over an interval of values of the random variable by means of
a probability function denoted by f(x).
Let X be a continuous random variable, and suppose that these values are assumed with
probabilities given by P(x < X < x +dx) = f (x)dx, where dx is a small positive quantity, then
f(x) is called the probability density function of the continuous random variable X
For a continuous random variable, f (x) = 0 for all x = xk,.
Properties of a continuous probability density function
1. f(x) ≥ 0
∞
2. ∫−∞ 𝑓(𝑥)𝑑𝑥 = 1
𝑑
3. P(c ≤ X < d) = ∫𝑐 𝑓(𝑥)𝑑𝑥
Note: A random variable reports the particular outcome of an experiment. A probability
distribution reports all the possible outcomes as well as the corresponding probability
Cumulative Distribution Function (cdf)
Defn: The cumulative distribution function (c.d.f.) (or distribution function) for a
random variable X is defined by

𝑭(𝒙) = 𝑷(𝑿 ≤ 𝒙), −∞ < 𝒙 ≤ ∞.

In the case of a process having discrete outcomes, the cumulative distribution is

the sum of the probabilities associated with seeing the outcome of x or less. Unlike
discrete distributions, the pdf of a continuous distribution at a value is not the
probability of observing that value. For continuous distributions the probability of
observing any particular value is zero. To get meaning probabilities you must integrate
the pdf over an interval of interest. Therefore, the cumulative distribution function for a
continuous function is associated with the area under the probability distribution
function for values of x or less.

The distribution function F(x) = ∑𝒙−∞ 𝑷(𝒙𝒊 ) for discrete random variable and
𝒙
𝑭(𝒙) = ∫−∞ 𝒇(𝒕)𝒅𝒕 for a continuous random variable.
Properties of distribution Functions

a) Discrete case

1) F(x) ≥ 0 for all x

2) F(-∞) =0 and F(∞) =1

3) P(a < X ≤ b)= F(b)-F(a)

b) Continuous case

1) F(x) ≥ 0 for all x

2) F(-∞) =0 and F(∞) =1

𝒃
3) P(a < X ≤ b)= ∫𝒂 𝒇(𝒙)𝒅𝒙 = F(b)-F(a)

𝒅𝑭(𝒙)
Relation between F(x) and f(x) in continuous case f(x) =
𝒅𝒙

Note: The c.d.f. for the distribution of a r.v. is unique, and completely describes the
distribution.

Example-8:

Example-9:
Example-11:
Example-12: Examine whether the following is a density function
f(x) = 2x 0<x≤1
= 4-2x if 1 < x < 2
=0 elsewhere
If f(x) is a density function (continuous) it has to satisfy the following two conditions: (1) f(x)
∞
≥ 0, (2) ∫−∞ 𝑓(𝑥)𝑑𝑥 = 1
1 2
Here, f(x) ≥ 0. But ∫0 2𝑥𝑑𝑥 + ∫1 (4 − 2𝑥)𝑑𝑥 = 10 ≠ 1
Hence f(x) is not a pdf.
Example-13:A continuous random variable has the following density function
f(x) = ax 0≤ x ≤ 1
=a 1≤ x ≤ 2
= -ax +3a 2≤ x ≤ 3
=0 elsewhere
(a) Determine a (b) Determine the distribution function (c) If three independent observations
are made what is the probability that exactly one of them is larger than 1.5
Answer
∞
(a) Since f(x) is a pdf, ∫−∞ 𝑓(𝑥)𝑑𝑥 = 1
1 2 3
=> ∫0 𝑎𝑥𝑑𝑥 + ∫1 𝑎𝑑𝑥 + ∫2 (−𝑎𝑥 + 3𝑎)𝑑𝑥 = 1
1 3
𝑎𝑥 2 𝑎𝑥 2
=> [ ] + [𝑎𝑥]12 +[− + 3𝑎𝑥] = 1
2 0 2 2

=> 2a =1 or a=1/2,

𝑥
(b) The distribution function 𝐹(𝑥) = 𝑃(𝑋 ≤ 𝑥) = ∫−∞ 𝑓(𝑡)𝑑𝑡
For x≤ 0, f(x) = 0, therefore F(x) =0
𝑥𝑡 𝑥2
For 0 ≤ x ≤ 1 f(x)= 1/2, therefore F(x) = ∫0 2 𝑑𝑡 = 2
1𝑡 𝑥1 𝑥 1
For 1≤ x ≤ 2, f(x)= 1/2, therefore F(x) = ∫0 2 𝑑𝑡 + ∫1 2 𝑑𝑡 =2 − 4
1 1𝑡 21 𝑥1 2𝑥 𝑥2 5
For 2≤ x ≤ 3, f(x)= 2 (3 − 𝑥), => F(x) = ∫0 2 𝑑𝑡 + ∫1 2 𝑑𝑥 + ∫2 2 (3 − 𝑡) 𝑑𝑡 = 2 − −4
4

For x≥ 3 F(x) =1
Therefore F(x) =0 for x≤ 0
𝑥2
= for 0 ≤ x ≤ 1
2
𝑥 1
= − for 1≤ x ≤ 2
2 4
2𝑥 𝑥2 5
= − − 4 for 2≤ x ≤ 3
2 4

=1 for x ≥ 3
1.5 1
(c) Probability of one observation less than 1.5 is F(1.5) = − 4 = 1/2
2
1 1
Probability of one observation greater than 1.5 is 1-F(1.5) = 1 − 2 = 2
111 1
Probability that a specified observation larger than 1.5 and other two less than 1.5 = 2 2 2 = 8

This can happen in 3C1=3 different ways. This means that

1 3
𝑃(exactly one of them is larger than 1.5) = 3 =
8 8

Exercises-1
I) If a random variable X follows the following probability distributions:
X: 0 1 2 3 4
P(X) K 3K 5K 7K 9K
(i) Find the value of K
(ii) Find P( X < 3 ), P( X = 3) , P( 0 < X < 4 )
( iii)Find the distribution function of X
2) Let X have probability function
X: 0 1 2
f(x) 9c2 9c c2
find c
3) A discrete r.v. X has the following probability function
X :0 1 2 3 4 5 6 7 8
P(X) :a 3a 5a 7a 9a 11a 13a 15a 17a
Evaluate 'a' and (1) find P( X < 2) and (2) P( X ≥ 5)
Find a such that

∑ 𝑃(𝑋) = 1

=> a+3a+5a+7a+9a+11a+13a+15a+17a = 1

81a=1

A=1/81

P(6) = 13/81

P(0 < X < 5)= 3/81+5/81+7/81+9/81= 24/81

P( X< 3) =P(0)+P(1)+P(3) =9/81

P(X>=7) = P(7)+P(8)= 32/81

F(x) =0 if x <0

=1/81 if 0 ≤ x<1

=4/81 if 1≤ x <2

……………=1 if x ≥8

4) A random variable X has the following probability function

X: 0 1 2 3 4 5 6 7
P(x): 0 k 2k 2k 3k k2 2k2 7k2+k
i) Find k, ii) Evaluate P( X <6) iii) P( X ≥ 6) iv)P(0 < X < 5) v) if P( X ≤ a) > 1/2 find the
minimum value of a. Write down the distribution function of X.
5) If f(x) =Kx ; x=1,2,3,4, 5 is a pdf, find (1) k (2) P(X=1 or 2) 3) P(1/2 < X< (5/2)/ X>1).
Find F(x)
6) If a random variable X has the density function f(x) = kx 0 < X< 2 and 0 elsewhere. Find k
and the distribution function F(x). Draw the graph of F(x)
9) The police records of a metropolitan area kept over the past 300 days show the following
number of fatal accidents.
Number of Fatal
Accidents Number of Days
x f(x)
0 45
1 75
2 120
3 45
4 15

(a) Develop a probability distribution for the daily fatal accidents.

Number P(x)
0 0.04
1 0.06
2 0.1
3 0.3
4 0.2
5 0.15
6 0.1
7 0.05
10) The management of the grocery store mentioned in exercise 1, has kept a record of bad
checks received per day for a period of 200 days. The data is shown below.
Number of Bad
Number of
Checks Received
Days

0 8
1 12
2 20
3 60
4 40
5 30
6 20
7 10
(a) Develop a probability distribution for the above data.
(b) Is the probability distribution that you found in Part a a proper probability distribution?
Explain.
(c) Determine the cumulative probability distribution F(x).
(d) What is the probability that in a given day the store receives four or less bad checks?
(e) What is the probability that in a given day the store receives more than 3 bad checks?
11:A continuous random variable X has probability function 𝑓(𝑥) = 3𝑥 2 , 0 ≤ 𝑥 ≤ 1. Find
two numbers a and b such that
(1) (𝑥 ≤ 𝑎) = 𝑃(𝑥 ≥ 𝑎) , (2)𝑃(𝑥 ≥ 𝑏) = 0.05
12:If the distribution function of a random variable x is F(x) =0 x <0, =x, for 0 < x < 1, =1 if
x ≥1, find P(2x+3≤ 3.6)
3𝑥 2 −𝑥 3
13:The distribution function of a r.v. is 𝐹(𝑥) = , 0 < x < 2. Find the pdf.
4

Expected Value, Variance and Standard Deviation of a Discrete Random Variable

When the values of the discrete random variable are multiplied by their respective
probabilities and the results are summed, this summation is known as the expected value. The
expected value can be viewed as a long run average. Given a discrete random variable X,
with probability function P(x) the expected value of X (also called the mean and denoted
E(X) ) or  (mean of random variable X) is defined as the weighted average of the values
of X may assume where weights are the corresponding probabilities, that is:

𝝁 = 𝑬(𝑿) = ∑ 𝒙𝑷(𝒙) for a discrete random variable

In general the rth raw moment 𝜇𝑛′ = E(𝑋 𝑛 ) = ∑ 𝑥 𝑛 𝑃(𝑥)

Example: Expected when an unbiased die is rolled?

1 2 3 4 5 6 X
1 1 1 1 1 1
P(X)
6 6 6 6 6 6

1 1 1 1 1 1
E(X) =1* 6 +2*6 +3*6+ 4*6 +5*6 +6*6 =21/6 =3.5

𝜇 = 𝐸(𝑋) = ∑ 𝑥𝑃(𝑥)

Example

Determine the expected number of broken tools per day for the probability distribution

Number Broken per day (X) P(X) X P(X)

0 .23 0
1 .50 .50
2 .15 .30
3 .08 .24
4 .04 .16
Total ∑ 𝑷(𝒙) =1.0 µ = ∑ 𝒙𝑷(𝒙) =1.2

Hence the mean or expected number of broken tools per day is 1.20. This value can be
interpreted as the long run average of broken tools per day. Obviously, this value cannot
occur on any day since the average is not an integer value. However in interpreting this value
say over 50 days, the factory can expect to have (50).(1.2)= 60 broken tools. This result does
not imply that exactly 60 tools will be broken over the 50 day period, but it does provide
management with an estimate of the replacement tools that will be needed. it can also be used
to for other planning purposes such as estimating the cost of the replacements, estimating the
downtime due to tool breakage, etc.

Moments

First raw moment or mean µ = ∑ 𝑥𝑃(𝑥)

Second raw moment µ12 = ∑ 𝑥 2 𝑃(𝑥)

Third raw moment µ13 = ∑ 𝑥 3 𝑃(𝑥)

………………………………….

The mean is a typical value used to summarize a discrete probability distribution. However, it
does not describe the amount of spread (variation) in a distribution. The variance does this
and hence it is measure of dispersion or variability of a random variable.
The general formula for computing the variance is:

𝜎 2 =∑(𝑥 − 𝜇)2 𝑃(𝑥) for a discrete random variable and

Standard deviation = √𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒

The computational steps are

1. Subtract the mean from each value, and square this difference.
2. Multiply each squared difference by its probability.
3. Sum the resulting products to arrive at the variance.

Note : Variance σ2 = E(x − E(x))2

= E(x)2-(E(x))2

= ∑ x 2 P(x)-(∑ xP(x))2 if discrete

Example: It would also be useful for a decision maker to have some knowledge about the
extent to which the actual number of breakages might tend to vary from the expected value of
breakages by calculating the variance or the standard deviation.
Table 2 Calculation of Variance for a Discrete Random Variable

Number Broken per day P(X) X –E(X) [X –E(X)]2 [X –E(X)]2*P(X)

0 .23 -1.2 1.44 .3312
1 .50 -.2 .04 .02
2 .15 .8 .64 .096
3 .08 1.8 3.24 .2592
4 .04 2.8 7.84 .3136
Total 1.0 σ2 =1.02
Hence the variance of daily tool breakdowns is  2 = 1.02 breakdowns squared/day.

Even though variance shows dispersion or variation around the mean, it is based on squared
values. The standard deviation is generally preferred measure of dispersion because the
result is in the same terms (not squared) as the original random variable (X). It is denoted as
 and is computed by taking the square root of the variance. For our example:
 = 1.02 = 1.01 breakdowns per month. A small standard deviation relative to the mean
can be interpreted as the values of the random variable are closely bunched to the expected
value (mean).

Continuous case: The mean, or expected value, or expectation, of a continuous r.v. X with
∞
p.d.f. f(x) is given by, 𝜇 = 𝐸(𝑋) = ∫−∞ 𝑥𝑓(𝑥)𝑑𝑥 .
∞
In general the rth raw moment 𝜇𝑛′ = E(𝑋 𝑛 ) = ∫−∞ 𝑥 𝑛 𝑓(𝑥)𝑑𝑥

Note: We interpret the mean in terms of relative frequency. If we were to repeated take a
measurement of the random variable X, recording all of our measurements, and calculating
the average after each measurement, the value of the average would approach a limit as we
continued to take measurements, and this limit is the expectation of X.

Defn: Let X be a continuous r.v. with p.d.f. f(x), and mean . The variance of X, or the
variance of the distribution of X, is given by
∞
𝜎 2 = ∫−∞(𝑥 − 𝜇)2 𝑓(𝑥)𝑑𝑥 . The standard deviation of X is just the square root of the
variance.

Note: In practice, it is easier to use the computational formula for the variance, rather than
the defining formula:
∞
𝜎 2 = E(x − E(x))2= E(x)2-(E(x))2 = ∫−∞ 𝑥 2 𝑓(𝑥)𝑑𝑥 − 𝜇 2

Question 1

Find the mean and variance of the following probability distribution

x P(x)
-1 0.1
0 0.1
1 0.4
2 0.1
5 0.3

Expected value of x is E(x) = ∑ 𝑥𝑃(𝑥) = -1*0.1+0*0.1+1*0.4+2*0.1+5*0.3= 2

Standard deviation 𝜎 = √𝐸 (𝑥 2 ) − (𝐸(𝑋))2

𝐸(𝑥 2 ) = -12*0.1+02*0.1+12*0.4+22*0.1+52*0.3= 8.4

𝐸(𝑥 2 ) − (𝐸(𝑋))2 = 8.4 - 22= 4.4

 Standard deviation 𝜎 =√4.4 = 2.10

x P(x) xP(x) x2P(x)

-1 0.1 -0.1 0.1
0 0.1 0 0
1 0.4 0.4 0.4
2 0.1 0.2 0.4
5 0.3 1.5 7.5
sum= 1 2 8.4

Question-2

If the pdf of a random variable X is g(x) = x2 + 2/3, o < X <1, Fin the mean of X.

Answer

E(X) = 0 xg(x)dx
1

1  2
= 0 x  x 2 +  dx
 3

2
= 0 x3 +
1
x dx
3
1
1 4 1 2
= x + x
4 3 0

7
=
12
1) The following table gives the probability distribution, p(x), of the number of customers, X,
arriving in a bank during an arbitrary 4-minute period.
X p(x)
0 .14
1 .29
2 .25
3 .18
4 .10
5 .04

a. Find the expected number of customers arriving in the next 4-minute period.
b. Find the standard deviation of number of customers arriving in the next 4- minute period.
2) For the following probability distribution
X -7 -2 0 5 13
P(X) .20 .15 .30 .25 .15
a. Expected value
b. Variance
 c. Standard deviation
Answer
X P(X) X*P(X) X*X*P(X)
-7 0.2 -1.4 9.8
-2 0.15 -0.3 0.6
0 0.3 0 0
5 0.25 1.25 6.25
13 0.15 1.95 25.35
1.5 42
𝐸(𝑋) = ∑ 𝑥𝑃(𝑥) = 1.5

𝐸(𝑋 2 ) = ∑ x 2 P(x) = 42

Note:- If you want the 4th raw moment, it is 𝐸(𝑋 4 ) = ∑ x 4 P(x)

2
Variance = σ2 = 𝐸(𝑋 2 ) − (𝐸(𝑋)) = ∑ x 2 P(x)-(∑ xP(x))2 = 42-1.5^2= 39.75

Standard deviation = √39.75 = 6.3

3) The number of new clients that they have obtained each month has ranged from 0 to 6. The
number of new clients has the probability distribution shown below.
Number of
New Clients Probability
0 0.05
1 0.10
2 0.15
3 0.35
4 0.20
5 0.10
6 0.05
(a) What is the expected number of new clients per month?
(b) Determine the variance and the standard deviation.
4) The number of electrical outages in a city varies from day to day. Assume that the number
of electrical outages in the city (x) has the following probability distribution.
x f(x)
0 0.80
1 0.15
2 0.04
3 0.01
(a) Determine the mean and the standard deviation for the number of electrical outages.
(b) If each outage costs the power company $1500, what is the expected daily cost?
5) Oriental Reproductions, Inc. is a company that produces handmade carpets with oriental
designs. The production records show that the monthly production has ranged from 1 to 5
carpets. The production levels and their respective probabilities are shown below.
Production
Per Month Probability
x f(x)
1 0.01
2 0.04
3 0.10
4 0.80
5 0.05
(a) Determine the expected monthly production level.
(b) Determine the standard deviation for the production.
Example: Continuing the example with flipping a fair coin twice. We want to find the c.d.f.
and construct a graph. The graph will be a step function.
Formulas

Central moments

The rth central moment is 𝜇𝑟 = 𝐸(𝑥 − 𝐸(𝑥))𝑟 =

∑𝑖 ( 𝑥𝑖 − 𝐸(𝑥))𝑟 𝑃(𝑥𝑖 ) 𝑖𝑓 𝑋 𝑖𝑠 𝑑𝑒𝑠𝑐𝑟𝑒𝑡𝑒
{ ∞
∫−∞( 𝑥 − 𝐸(𝑥))𝑟 𝑓(𝑥)𝑑𝑥 𝑖𝑓 𝑋 𝑖𝑠 𝑐𝑜𝑛𝑡𝑖𝑛𝑢𝑜𝑢𝑠

This means that 𝜇1 = 𝐸(𝑥 − 𝐸(𝑥))1 = 𝐸(𝑥) − 𝐸(𝑥) = 0

𝜇2 = 𝐸(𝑥 − 𝐸(𝑥))2 = 𝑣𝑎𝑟𝑖𝑎𝑛𝑐𝑒 = 𝜎 2
Central moments in terms of raw moments
𝜇1 = 0
𝜇2 = 𝜇2′ − 𝜇1′2
𝜇3 = 𝜇3′ − 3𝜇2′ 𝜇1′ + 2𝜇1′3
𝜇4 = 𝜇4′ − 4𝜇3′ 𝜇1′ + 6 𝜇2′ 𝜇1′2 − 3𝜇1′4
……………………………………
Mean, Variance and covariances
Mean = 𝜇 = 𝐸(𝑥)
Variance = 𝜎 2 = 𝐸(𝑥 − 𝐸(𝑥))2 = 𝐸(𝑥 − 𝜇)2 = 𝐸(𝑥 2 ) − [𝐸(𝑥)]2
𝜇2
Measure of skewness 𝛽1= 𝜇33 and 𝛾1 = √𝛽1
2
𝜇4
Measure of kurtosis 𝛽2= 𝜇2 and 𝛾2 = 𝛽2 − 3
2