Summary of Lecture 7

I. Binomial distribution
- A binomial experiment consists of a fixed number (say n) of independent trials.
Each of these trials can result in only one of two possible outcomes, labeled as
a success and a failure; the probability of success is p, and the probability of
failure is q = 1- p.
- Let X be the number of successes in n trials of the binomial experiment. Then X
is a binomial random variable.
- The probability distribution of X is

Important formula: 𝑃 𝑋 = 𝑥 = 𝐶'( 𝑝 ' (1 − 𝑝)(.' , for x = 1, 2, …, n.

In excel: 𝑃 𝑋 = 𝑥 = 𝐶'( 𝑝 ' (1 − 𝑝)(.' = BINOMDIST(x, n, p, FALSE)
𝑃 𝑋 ≤ 𝑥 = BINOMDIST(x, n, p, TRUE)
The expected value of X is 𝜇 = 𝐸 𝑋 = 𝑛𝑝
The variance of X is 𝜎 4 = 𝑉 𝑋 = 𝑛𝑝(1 − 𝑝)
The standard deviation of X is 𝜎 = 𝑛𝑝(1 − 𝑝)
II. Poisson distribution
- The Poisson experiment: typically fits cases of rare events (also referred as
successes) that occur over a fixed amount of time or within a specified region.
- The Poisson random variable indicates the number of successes that occur during
a given time interval, or in a specific region, in a Poisson experiment.
 - Poisson probability distribution (of a Poisson random variable having the
expected value 𝜇, that is the average number of successes occurring in the
given time interval or region is 𝜇):

In excel: P(X = x) = POISSON.DIST(x, 𝜇, FALSE)

𝑃 𝑋 ≤ 𝑥 = POISSON.DIST(x, 𝜇, TRUE)