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Northeastern Mindanao Academy

“The School that Trains for Life”
P10 Los Angeles, Butuan City

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Northeastern Mindanao
STATISTICS & Academy has greatly envisioned to
transform the students into
PROBABILITY exemplary citizens and leaders by
providing them with physical, mental
and social and spiritual trainings.

Statement of Mission

By making Christ the Bedrock

of Education, Northeastern
Mindanao Academy is committed to
prepare students for higher academic
pursuits by consistently providing
enhanced learning experiences that
promote maximum development of
the mind, body, and soul; and to
inspire them to gain the highest
possible capacity for usefulness and
service in the life that now and in the
life of the world to come.

Statement of Philosophy

First Quarter Northeastern Mindanao

Academy conforms to the Seventh –
day Adventist belief that the students
are God’s heritage and their teachers
are His servants. Their school in all
level adheres the commission to
educate the young for a true
knowledge of God and experience
His companionship in study and
service; to put in effect the Divine
Plan “to restore in man the lost
image of God”.
Name of Learner: _______________________________ EDWIN C. BOLLESER
Grade Level: __________________________________ Teacher
Section: ______________________________________
Contact #: 09175520137
Address: _____________________________________
E-mail: eduinbolls@yahoo.com
Contact #: ____________________________________
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to our Statistics & Probability class! Enjoy as we learn together. Have fun!

Module 1 – Discrete Probability Distribution

Objectives: At the end of the module, I can:

1. illustrate a random variable (discrete and continuous).

2. distinguish between a discrete and a continuous random variable.
3. finds the possible values of a random variable.
4. illustrate a probability distribution for a discrete random variable and its properties.
5. construct the probability mass function of a discrete random variable and its
corresponding histogram.
6. compute probabilities corresponding to a given random variable.
7. illustrate the mean and variance of a discrete random variable
8. calculate the mean and variance of a discrete random variable.
9. Interpret the mean and the variance of a discrete random variable.
10. Solve problems involving mean and variance of probability distributions.

Introduction:
Life is full of uncertainties and surprises. Decision making is very important skill that we should
possess nowadays. Every day, we face many situations that need an immediate and sensible decision.
If you decide whether or not to take a certain college degree, you should consider many factors. Or you
want to know if whether or not to buy a certain product after knowing the history of the company
that manufactured it. These events and situations in real life can be better decided only with careful
choices-choices that can be made with precise anticipation of chances.
Probability is the body of knowledge that focuses on activities that involve predicting chances and
quantifying the randomness of events. In this unit, we will provide you with modules that will allow
you to appreciate the importance of probability.

Random Variables

A random event, like drawing a face card in a standard deck, always gives a random
outcome. Most of the time, when a random event is taken under consideration, the focus is
not on the outcome itself but on several factors that may affect the outcome. For example,
in the same event of drawing a face card in a standard deck of cards, you are more
interested in the number of times a face card appears after 10 draws instead of the actual
outcome of getting the card. This is because you know that the outcome in each trial
changes, considering you have 52 different cards. This situation illustrates the concept of a
random variable.
A random variable, is also called a stochastic variable, is a rule that assigns a numerical
value or characteristic to an outcome of an experiment. It is essentially a variable, usually
denoted as X or any capital letter of the alphabet, because its value is not constant – it
assumes different values due to chance. For example, a die is rolled five times and a random
variable X is assigned as the number of times a “6” appears. The random variable X can take
on the values 0, 1, 2, 3, 4, and 5 as the outcome may vary from trial to trial.
Generally, there are two categories of random variables: discrete and continuous random
variables. A discrete random variable takes on countable number of distinct values, which
are whole numbers such as 0, 1, 2, 3, 4, 5, … while a continuous random variable assumes
an infinite number of possible values including the decimals between two counting
numbers. For a quick comparison, the values of a discrete random variable are basically
“counts” and those of a continuous random variable are “measurements.”
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Definition of Terms
A random variable, which is usually written using a capital letter, is a variable that
assigns a numerical value to each outcome of a random event. It can be classified as discrete
or continuous depending on whether the value is obtained by counting or by measurement.
Range Space is the set of all values possible for a given random variable.

Example 1: Discrete vs. Continuous Random Variables

a. Discrete Random: A fair coin is tossed thirty times and the number of times X that a tail appears is a discrete
random variable since its possible values may be determined by counting, i.e., 0, 1, 2, 3, 4, …, 30.
Note: A coin has two sides, the head and the tail. When you toss a coin, the result may be a head or a tail.. If it
is a head, hence the X=0 (0 means when the coin is tossed the outcome is Head not a tail}. The value of X= 0,
1,2,3,..30 are the possible values of tails.

b. Continuous random variable: A machine is run and the recorded time it starts to experience a glitch
illustrates a continuous random variable since the value of the variable may be assigned using measurement,
eg. Y= 1.3, 2.22; not exac.

As mentioned earlier, a random variable may take in different values depending on the outcome of
each trial. Now, the set of all values possible for a given random variable is called the range space.

Example 2: When two fair coins are tossed and the random variable X is defined as the number of heads that
appear. Find the range space.

Solution:
Let us review our tree diagram:

1st coin 2nd coin Outcome Range Space

H H (H,H) 2
T (H,T) 1
T H (T,H) 1
T (T,T) 0

In the range space, 2 indicates that there are two heads; 1 means 1 head, 0 means no head. There should be no
repetition of outcomes in the range space. There are two 1’s but we only write only 1 in the range space.
Hence, the range space= {0, 1, 2}. in tossing two fair coins. Do not forget to write your brace { }.

Example 3: When two fair coins are tossed and the random variable X is defined as the number of tails that
appear. Find the range space.

Solution:
Solution/s Explanation/s
range space= {0, 1, 2} Based on the tree diagram the range space is shown at
the left side. 0 means no tail or (H,H), 1 means 1 tail or
(H,T), (T,H)(no repetition is allowed in the range
space), and 2 means (T,T).
Identifying the range space allows you to find the possible values of a random variable. The value of a
random variable X at a specific outcome x, is usually denoted by X(xi)

Example 4: A pair of dice is thrown and the random variable Y is defined such that Y gives the sum of
the two numbers that appear. Determine the following:
a) Range space c. Y (4, 6)
b) Y (3, 2) d. Y (1, 3)
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Solution:
Second Die
F 1 2 3 4 5 6
I 1 (1,1) (1,2) (1,3) (1,4) (1,5) (1,6)
R
S
2 (2,1) (2,2) (2,3) (2,4) (2,5) (2,6)
T 3 (3,1) (3,2) (3,3) (3,4) (3,5) (3,6)
4 (4,1) (1,2) (4,3) (4,4) (5,5) (6,6)
D
I 5 (5,1) (5,2) (5,3) (5,4) (5,5) (5,6)
e 6 (6,1) (6,2) (6,3) (6,4) (6,5) (6,6)
Solution/s Explanation/s
(3,2) The outcome (3,2) means 3 is the outcome of
the first die and 2 is the outcome of the
second die
a) Range space = { 2,3,4,5,6,7,8,9,10,11,12}. Take note: Y is defined such that Y gives the
sum of the two numbers that appear.
Meaning we will add the two numbers like
(1,1) means 2; (1,2) means 3, and so on and
so forth. Hence, your range space is the set of
all possible sums.
b) Y(3,2) It is defined as the sum of two numbers.
Y = 3+2=5
c) Y(4,6) It is defined as the sum of two numbers.
Y= 4+6= 10
d) Y(1,3) It is defined as the sum of two numbers.
Y= 1+3= 4

Discrete Probability Distribution

In the study if random events, you should be interested not only in determining the
possible value of a random variable but also in the probability that the variable will assume
that particular value.
If you have a random variable and you know all the possible values that the variable can
take on, you can easily determine the probability that the random variable will have a
particular value. Consider the example below.

Example 5: Consider the random event of tossing four coins and the variable X gives the number of heads that
appear. Construct a probability distribution table.
Solution:
There are 16 possible outcomes. You may use a tree diagram or a table as shown below.

HHHH HTHH THHH TTHH

HHHT HTHT THHT TTHT
HHTT HTTH THTH TTTH
HHTT HTTT THTT TTTT

Solution/s Explanation/s
Our range space is: {0, 1, 2, 3, 4}. Step 1: We let X as the variable that gives the number
of heads that appear. (note: 0 means no head or
(TTTT), 1 means (HTHH), etc.)
Step 2: Compute for the probability of X.

𝑛(𝐸) Step 2: Compute for the probability of X.

P(E) =
𝑛(𝑆)
The formula of the probability of an event P(E) , where
n(E) is the number of the element in the event and
n(S) is the number of the elements in the sample
space. In this case your sample space is 16.
Compute for the probability of the range space: For 0: it means no head/s that appear or (TTTT). There
𝑛(𝐸) is only 1 of this kind. Hence, n(E) = 1 and n(S) = 16.
For X= 0: P(E) =
𝑛(𝑆)
1
P(0) = = 0.0625 Simplify. Which means 6.25% probability that no head
16
will appear (to change decimal to percent, move 2
decimal places to the right and affix the percent sign)
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𝑛(𝐸) 4 For 1: means there is only 1 head that appears. In this

For X=1: P(E) = ; P(1) = = 0.25
𝑛(𝑆) 16
case: (HTTT), (THTT), (TTTH), and (TTHT). So, n(E) = 4.
Simplify. Which means 25% probability that 1 head will
appear.
𝑛(𝐸) 6 For 2: means there are two heads that appear. In this
For X=2: P(E) = ; P(2) = = 0.375
𝑛(𝑆) 16
case: ((HHTT), (HTHT), (HTTH), (THHT), (THTH), and
(TTHH). So, n(E)= 6. Which means 37.5% probability
that 2 heads will appear.
𝑛(𝐸) 4 For 3: means there are three heads that appear. In this
For X=3: P(E) = ; P(3) = = 0.25
𝑛(𝑆) 16
case: (HHHT), (HHTH), (HTHH), and (THHH). So, n(E) =
4. Simplify. Which means 25% probability that 3 heads
will appear.
𝑛(𝐸) 1 For 4: means there are 4 heads that appear. In this
For X=4: P(E) = = P(4) = =0.0625
𝑛(𝑆) 16
case: (HHHH). Hence, n(E) = 1

After you are done finding its probability, you construct a probability distribution table as shown below.

Number of heads (X) 0 1 2 3 4

Probability P(X) 0.0625 0.25 0.375 0.25 0.0625

This table is called a probability distribution which is also known as probability mass function.

A probability distribution, also known as probability mass function, is a table that gives a list
of probability values along with their associated value in the range of a discrete random variable.

Note from the previous probability mass function that the following properties are
observed given that p, are the individual probabilities for each value (xi) of the random
variable:
1. Each probability value ranges from 0 to 1, in symbols, 0 ≤ pi ≤ 1.
2. The sum of all the individual probabilities in the distribution is equal to 1: thus,
p1 + p2 + p3 + … + pn = ∑𝑛𝑖=1 𝑝I = 1.
Also, note that like any other statistical distribution, a probability mass function may be
graphed using a histogram in which the horizontal axis represents the values of the random
variable X and the vertical axis gives the corresponding probabilities, P(X). For example,
below is the related histogram of the random variable X (showing a head after tossing four
coins).

Hence, in example 5 the sum of all the individual probabilities in the distribution is equal to 1 as shown
below.
0.0625 + 0.25 + 0.375 + 0.25 + 0.0625 = 1

Below is the histogram of the random variable X (showing a head after tossing four coins).

Probability of Showing a Head After Tossing 4

Coins
0.4
Probability

0.3

0.2

0.1

0
0 1 2 3 4
Number of Heads
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Example 6: A card is drawn from a deck of 20 cards (i.e., all the cards numbered 1 to 5 in a standard deck) and
the random variable W gives the number on the card. Construct the probability mass function and
its corresponding histogram.

Solution:
Solution/s Explanation/s
range space= {1, 2, 3, 4, 5). Where n(S)= 20. After finding the range space and n(s) , solve for the
𝑛(𝐸) individual probability. Use formula: Let W the random
P(E) =
𝑛(𝑆)
variable
4 1
P(W = 1) = = = 0.2 P(W=1) means how many 1’s in the deck of cards.
20 5
There are four. See the table below.
1 2 3 4 5
4 1 1 2 3 4 5 P(W=2) means how many 2’s. There are four 2’s.
P(W = 2) = = = 1 2 3 4 5
20 5
= 0.2 1 2 3 4 5
4 1
P(W = 3) = = = 0.2 P(W=3) means how many 3’s. There are four 3’s.
20 5

P(W = 4) =
4
=
1
= 0.2 P(W=4) means how many 4’s. There are four 4’s.
20 5
4 1
P(W = 5) = = = 0.2 P(W=5) means how many 5’s. There are four 5’s.
20 5

The probability distribution table or probability mass function is shown below. Where the range space is on the
first row and the probability or P(W) is on the second row.

The probability distribution table is shown below:

Number of Heads (W) 1 2 3 4 5

Probability (P(W)) 0.2 0.2 0.2 0.2 0.2

The histogram of the random variable W(gives the number of the cards) is shown below.

Probability of Showing a Head After Tossing 4

Times
0.25

0.2
Probability

0.15

0.1

0.05

0
1 2 3 4 5
Number of Heads

Assessment 1.1:
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Mean of a Discrete Random Variable

Similar to the frequency distribution of a sample in a given population as discussed in
elementary statistics, the probability distribution of a discrete random variable needs to
be summarized using a central value in order that it will give the general behavior of the
random variable under observation. For a sample frequency distribution, this is usually
called the mean or average of the data.
The mean for a discrete random variable, denoted as 𝜇, may be computed similarly
with the way a weighted average for frequency distribution is computed, i.e., you take the
summation of all the products of a particular value or outcome x i and its corresponding
probability pi.

MEAN OF A DISCRETE RANDOM VARIABLE

The mean 𝜇 of a discrete random variable is the central value of average of its corresponding
probability mass function. It is computed using the formula
𝜇 = = ∑𝑛𝑖=1 𝑥 i𝑝(𝑥 i)
where xi is the ith outcome and p(xi) is the probability of the ith outcome.

Example 7: Find the mean of the probability distribution involving the random variable X that gives the
Number of heads that appear after tossing four coins. Refer to example 5:

Number of Heads (X) 0 1 2 3 4

Probability (P(X)) 0.0625 0.25 0.375 0.25 0.0625
Solution:
Solution/s Explanation/s
Identify the individual products of each outcome and their corresponding probability, and then, determine the
summation. To solve for the mean, we use the formula, 𝜇 = = ∑𝑛𝑖=1 𝑥 i𝑝(𝑥 i)
𝜇 = 𝑥 1𝑝(𝑥 1) + 𝑥 2𝑝(𝑥 2) + 𝑥 3𝑝(𝑥3) + 𝑥 4𝑝(𝑥 4) + 𝑥 5𝑝(𝑥5) The meaning of 𝜇 = = ∑𝑛𝑖=1 𝑥 i𝑝(𝑥 i) is shown at the
left side.
𝜇 = (0)(0.625) + (1) 0.25) + (2)(0.375) + (3)(0.25) + Use the table above. Substitute the value of P(x) and X
(4)(0.0625) as shown at the left.
𝜇 = 0 + 0.25 + 0.75 + 0.75 + 0.25 Simplify.
𝜇= 2 The mean of the distribution is 2. This means that the
average number of heads that will appear in a single
toss of four coins is 2.

Example 8: The probabilities that a printer produces 0, 1, 2, and 3 misprints are 42%, 28%, 18%, and 12%,
respectively. Construct a probability mass function and then compute the mean value of the
random variable.

Solution:
Solution/s Explanation/s
The probability distribution table or probability mass function and its corresponding values are shown
below. The number of misprints (X) is written on the first row and the probability P(X) is on the second
row. To change percent to decimal, move two decimal places to the left.
Number of Misprints (X) 0 1 2 3
Probability P(X) 0.42 0.28 0.18 0.12
𝜇 = ∑4𝑖=1 𝑥 i𝑝(𝑥 i) = 𝑥 1𝑝(𝑥1) + 𝑥 2𝑝(𝑥 2) + 𝑥 3𝑝(𝑥3) + To solve for the mean, we use the formula at the left
𝑥 4𝑝(𝑥 4) side. 𝑥 1𝑝(𝑥1) means; 𝑥 1=0 and p(x1) = 0.42. Then, find
the product. And so on & so forth.
𝜇 = (0 × 0.42) + (1 × 0.28) + ( (2 × 0.18) + (3 × 0.12) Simplify.
𝜇 = 0 + 0.28 + 0.36 + 0.36 The mean value of the variable is 1. Thus, the average
number of misprints the printer can produce
𝝁= 1 is 1 (or one bond paper if you are printing bond
papers).
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Variance and Standard Deviation of a Discrete Random Variable

Another important characteristic is describing a given probability distribution is
the variance and its related standard deviation. Recall that variance and standard
deviation are measures of variability, which means that they describe the degree of
homogeneity or heterogeneity of a given set of data. This is also the case for random
variables.
Mostly, the mean value is not enough to describe a random variable because
there are instances when two probability distributions have the same mean value but
are entirely different. Consider the following probability distributions:

Example 9: Find the mean (𝜇) of the following probability distribution table.
(X) 2 4 6 8
P(X) 0.25 0.25 0.25 0.25
Solution:
Solution/s Explanation/s
𝜇 = ∑𝑛𝑖=1 𝑥 i𝑝(𝑥 i) To solve for the mean ( 𝜇), we use the formula:
𝜇 = (2 × 0.25) + (4 × 0.25) + ( (6 × 0.25) + (8 × 0.25 Which means x1=2 and p(x1)=0.25. And so on and so
𝜇 = 0.5 + 1 + 1.5 + 2 forth. Find the sum.
𝜇= 5

Solve for the mean of the following probability distribution table below and observe the result.

Example 10: Find the mean (𝜇) of the following probability distribution table

(X) 2 4 6 8
P(X) 0.4 0.1 0.1 0.4
Solution:
Solution/s Explanation/s
𝜇 = ∑𝑛𝑖=1 𝑥 i𝑝(𝑥i) To solve for the mean ( 𝜇), we use the formula

𝜇 = (2 × 0.4) + (4 × 0.1) + ( (6 × 0.1) + (8 × 0.4) Which means x1=2 and p(x1)=0.4. And X2=4 and
p(x2)=0.1; so on and so forth.
𝜇 = 0.8 + 0.4 + 0.6 + 3.2 Find the product and simplify. Hence,
𝜇= 5

𝜇
The two distributions have the same mean with the same values for the variable. However, the
distribution of the probabilities is completely different. The variance and the standard deviation can help
you describe how different these two distributions are. The variance of a probability distribution depends on the
squared deviations from the mean of each value of the random variable multiplied by their corresponding
probabilities. The standard deviation, then, is determined by getting the square root of the variance.

Variance and Standard Deviation of a Random Variable

The variance and standard deviation are two values that describe how scattered or spread
out the scores are from the mean value of the random variable. The variance, denoted as 𝛿 2 , is
determined using the formula:
𝛿 2 = ∑𝑛𝑖=1 (𝑥 i − 𝜇)2 𝑝(𝑥 i)
The standard deviation 𝛿 is the square root of the variance, thus,
𝛿 = √∑𝑛𝑖=1 (𝑥𝑖 − 𝜇)2 𝑝(𝑥𝑖 )

The following steps will simplify the process of computing the variance and standard
Deviation.
1. Compute the mean value of the random variable.
2. Subtract each value from the mean and square the differences.
3. Multiply the squared differences by the corresponding probabilities.
4. Add all the products. This gives the variance of the probability distribution.
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Example 11: Compute the variance and standard deviation of the two probability distributions (example 9 &
10) with the same 𝜇 of 5 presented earlier. Interpret the values.

Solutions:
Solution/s Explanation/s
𝛿 2 = ∑𝑛𝑖=1 (𝑥 i − 𝜇)2 𝑝(𝑥 i) To solve for the variance we use the formula:

Given: xi = 2,4,6, and 8 X -first row in the table; 𝑝(𝑥i) = the values in the
𝜇=5 second row
Find: (x − 𝜇) and (x − 𝜇)2
x 2 4 6 8 (x1 − 𝜇)= 2 - 5 = -3; Write the result in the table, see
p(x) 0.25 0.25 0.25 0.25 (x2 − 𝜇) = 4 - 5= -1 arrow
(x − 𝜇) -3 -1 1 3 (x3 − 𝜇)= 6 – 5 = 1
(x − 𝜇) 2 (x4 − 𝜇)= 8 – 5 = 3
Next: Find (x − 𝜇)2 Write the product in (x − 𝜇)2 in row four(see arrow)
x 2 4 6 8 (x1 − 𝜇)2 = (-3)2= 9 Write the result in the 4th row.
p(x) 0.25 0.25 0.25 0.25 (x2 − 𝜇)2 = (-1)2 = 1
(x − 𝜇) -3 -1 1 3 (x3 − 𝜇)2= (1)2 = 1
(x − 𝜇)2 9 1 1 9 (x4 − 𝜇)= (3)2 = 9

𝛿 2 = ∑𝑛𝑖=1 (𝑥 i − 𝜇)2 𝑝(𝑥i) Solve for the variance using the formula:

𝛿 2 = 9(0.25) + 1(0.25) + 1(0.25) + 9(0.25) Which means: (x1 − 𝜇)2 = 9; p(x1)= 0.25. (x2 − 𝜇)2 = 1;
p(x2)= 0.25; so on & so forth. Find the sum.
𝛿2 = 5 The Variance.
𝛿 = √5 = 2.24 The standard deviation is 2.24

We will find the standard deviation of the given distribution below knowing that the two distribution has the
same mean.

Solution:
Solution/s Explanation/s
Given: xi = 2,4,6, and 8 X -first row in the table; 𝑝(𝑥i) = the values in the
𝜇=5 second row
(x1 − 𝜇)= 2 - 5 = -3
x 2 4 6 8 (x2 − 𝜇) = 4 - 5= -1
p(x) 0.4 0.1 0.1 0.4 (x3 − 𝜇)= 6 – 5 = 1
(x − 𝜇) -3 -1 1 3 (x4 − 𝜇)= 8 – 5 = 3
(x − 𝜇)2 Write the results in the third row, see arrow. Next, fill
up the 4th row.
x 2 4 6 8 (x1 − 𝜇)2 = (-3)2= 9 Write the result in the 4th row.
p(x) 0.4 0.1 0.1 0.4 (x2 − 𝜇)2 = (-1)2 = 1
(x − 𝜇) -3 -1 1 3 (x3 − 𝜇)2= (1)2 = 1
(x − 𝜇) 2 9 1 1 9 (x4 − 𝜇)= (3)2 = 9
2 𝑛 2
𝛿 = ∑𝑖=1 (𝑥 i − 𝜇) 𝑝(𝑥 i) Solve for the variance using the formula:
𝛿 2 = 9(0.4) + 1(0.1) + 1(0.1) + 9(0.4) Which means: (x1 − 𝜇)2 = 9; p(x1)= 0.4. (x2 − 𝜇)2 = 1;
p(x2)= 0.1; so on & so forth. Find the sum.
𝜹𝟐 = 7.4 The variance
𝜹 = √𝟕. 𝟒 = 2.72 The standard deviation

Observe the first standard deviation is 𝜹 = 2.24 while the second distribution is 𝜹= 2.72.. The second
probability distribution is more spread than the first though both distribution has the same mean.
 10

Assessment 1.2:

Applications of Discrete Random Variables: Expected Value

Sometimes, you want to find out how choosing a random event will benefit you in the
long run. Suppose you join a raffle event that will cost you a ticket worth Php 200 for a chance
to win a grand prize of Php 10 000. You know that there are 500 tickets sold for the event and
you want to find out the amount of money that will pay you off for buying one of the tickets.
This situation will be best understood and decided if you know the concept of expected value.

Expected Value
Suppose that a random variable X assume i number of possible values 𝑥 1, 𝑥 2, 𝑥 3,… 𝑥 i
and the corresponding probability of each value is given by p(𝑥), then the expected value for X,
denoted as E(X), is equal to the mean value of the probability distribution. Thus,

𝐸(𝑋) = ∑𝑛𝑖=1 𝑥 i𝑝(𝑥 i).

To illustrate this concept, assume that the random variable X gives the payoff from buying the ticket. There
can only be two values for the payoff: if you win, the payoff will be Php 9 800 (it is not Php 10,000 due to
Php200 worth of ticket) and if you lose, the payoff will be – Php200. You know that the probability of winning

𝑛(𝐸)
is P(E) = where n(E) = 1. Which means only 1 ticket holder wins. And n(S)=500 since
𝑛(𝑆)
there were 500 tickets sold. Hence, the probability of
winning is,
𝑛(𝐸) 1
P(E) = =
𝑛(𝑆) 500

The probability of losing is

𝑛(𝐸)
P(E) = . Where n(E) = 499. Which means that are 499 non winning
𝑛(𝑆)
Tickets. Hence, the probability of losing is
𝑛(𝐸) 499
P(E) = = .
𝑛(𝑆) 500

Below is the complete probability distribution table.

Payoff (X) Php 9 800 – Php200

1 499
P(X)
500 500

To find the expected payoff from joining the raffle, multiply each possible payoff value by their
corresponding probabilities and add all the products. We use the formula
𝐸(𝑋) = ∑𝑛𝑖=1 𝑥 i𝑝(𝑥 i).

1 499
E(X) = (9 800)( ) + (–200) ( )
500 500

E(X) = 19.6 + (–199.6)

E(X) = –180

The expected payoff for each ticket is –180, a negative number, which means that each of the 500 raffle
tickets is expected to have an average loss of Php 180 in the long run.
The expected value of a random variable, also known as expectation or payoff value, is the mean of the
probability distribution of the given random variable.
 11

Study the following examples.

Example 11: A card is drawn at random from a deck of cards consisting of cards numbered 1 through 5. A
player wins Php 100 if the number on the card is even and loses Php 100 if the number on the
card is odd. What is the expected value of his winnings?
Solution:
Solution/s Explanation/s
The cards are numbered
1 2 3 4 5
Even cards (winning): 2 and 4 Odd cards (losing): 1,3,and 5.
𝑛(𝐸) 2 The probability of winning is: with n(E)=2 (even cards)
P(E) = ==
𝑛(𝑆) 5
and n(S)=5, is the number of cards from a deck. Hence,
the probability of winning is:
𝑛(𝐸) 3 The probability of losing is: with n(E)=3 (odd cards) and
P(E) = ==
𝑛(𝑆) 5
n(S)=5, is the number of cards from a deck
(X) 100 – 100 At the left is the complete probability distribution
2 3 table.
P(X)
5 5
Use the formula for expected value:
𝑛
𝐸(𝑋) = ∑𝑖=1 𝑥 i𝑝(𝑥 i).

2 3 2 3
E(X) = (100)( ) + (–100) ( ) Substitute x1=100 and p(x1)= ; x2=(-100) and p(x2)= .
5 5 5 5
E(X) = 40 – 60
E(X) = –20 Simplify.
Hence, The expected value is –20. Thus, the player is expected to lose an average of Php 20 in the game.

Assessment 1.3:

As there are many problems in the real world, especially those that involve unplanned events,
may be modeled and solved by assigning a random variable and using probability, so with the
solutions of our problems depend upon the distance of our knees to the floor.

Congratulations! You are ready for the next module!

References:
Canlapan, R. and Campena, F. 2016. Diwa Senior High School Series: Statistics and Probability. Makati
City, Philippines. University Press First Asia.

Creative commons.org
Online Math learning
Statistics for Managers Using Microsoft excel 2004 Prentice-Hall.