Let’s start with something interesting!

???????????
Guess who is he?
It is a story about…
Paan
Singh
Tomar
 Another
interesting
story…

A man from ZERO to HERO!!!

Do not you
wonder…
about LIFE?
Life is full of
UNCERTAINTY!!!
Itis impossible sometime to say…what
will happen from one minute to next.

But,certain events are more likely to

occurs than others.

Knowing about them – which are more

likely to occur and which are less – help
us in taking informed decisions!
Understanding
of it takes us
to…
PROBABILITY
Taking you to the
WORLD OF
PROBABILITY
 Enjoy Randomness – World of Probability!!!
PROBABILITY
Distance

Time
PROBABILITY
PROBABILITY

First…

…Some basics about Probability

PROBABILITY Basics of Probability …

Probability is the study of randomness

and uncertainty.

A Probability is a Numerical Measure

of the Likelihood of Occurrence of an
event; more it is , more is the likelihood
of happening of an event.
PROBABILITY Building Blocks of Probability…
PROBABILITY What makes to define PROBABILITY?

RANDO
M
SAMPLE EXPERI
OUTCO MENT
ME

SAMP EVENT
LE
SPACE

PROBABILITY
PROBABILITY RANDOM EXPERIMENT
… is a process that lead to more than one possible
outcome and each outcome is uncertain.

… is a process leading to at least two possible

outcomes with uncertainty as to which will occur.

… is any procedure
1. that can be repeated, theoretically or otherwise, an infinite number of
times;
2. that has a well-defined set of possible outcomes; and
3. the outcome that will prevail in a given experience is uncertain.
 Give Examples –
RANDOM EXPERIMENT
PROBABILITY
COMMUN
THINK
SHOW
ICATE
PROBABILITY SAMPLE OUTCOME

Each of the potential eventualities of a

random experiment is defined as sample
outcome.

Possibleoutcomes of a random
experiment is called Sample Outcome.
 Give Examples –
SAMPLE OUTCOME
PROBABILITY
COMMUN
THINK
SHOW
ICATE
PROBABILITY SAMPLE SPACE

The totality of all eventualities of a

random experiment is called Sample
Space.

Complete set of all possible outcomes of

a random experiment is called Sample
Space.
 Give Examples –
SAMPLE SPACE
PROBABILITY
COMMUN
THINK
SHOW
ICATE
PROBABILITY EVENT
… is any subset of a sample space.

…is any designated collection of sample

outcomes, including individual outcomes, the
entire sample space, and the null set.

…is a subset of basic outcomes of the sample

space.
 Give Examples –
EVENT
PROBABILITY
COMMUN
THINK
SHOW
ICATE
PROBABILITY Events may be …

• Simple, Joint or Compound.

•Discrete or continuous.
PROBABILITY Please note and remember…

•Any event occurs if any of the

basic outcomes comprising the
event occurs.

•An event is said to occur of the

outcome of the experience is one
the members of that event.
PROBABILITY Each event can be expressed as a SET!!!!

There is a strong connect between

EVENT and Set Theory!!!
 Since sets can be represented by Venn
Diagrams; so our EVENTS!!!!!!
PROBABILITY
PROBABILITY Sample Space is our Universal Set!!!

Universal set – Sample Space

PROBABILITY Any subset of Universal Set is an event!!!

Event A
PROBABILITY Let’s revise our Set Theory

Union

Intersection

Complement
PROBABILITY Back to the definition of the Probability

 Probability – the chance 1 Certain

that an uncertain event will
occur (always between 0
and 1)
.5

Please note that …

P(U) = 1; and P(ϕ) = 0.

0 Impossible
PROBABILITY Probability Notation

If E is an event, then P(E) represents the

probability that event E occurs. It is read

“the probability of E.”

PROBABILITY Basics of Probability …Probability Space

A Probability Space is generally

characterized by (Ω, F, P) where ...
◦ Ω is the Sample Space; also called space of
elementary events.

◦ F is a class of events in a random experiment.

◦ P is a probability measure defined over F.

PROBABILITY GOING MORE DEEPER…

Probability is always defined

over a Probability Space; but

how should the same be

defined and quantified? Do
we have some underlying
theories that help us in this
regard?
PROBABILITY

We have some theories behind it!!!!

 Basics of Probability …
Theories of Probability
PROBABILITY
Classical Theory of Probability

Relative Frequency Theory of Probability

Subjective Theory of Probability

Axiomatic Theroy of Probability

PROBABILITY Probability of an Event – Classical Theory

In this case, we can represent the probability of an

event as P(E) = f/N.
PROBABILITY
Time to apply!!! Application of the Classic Theory

Probability of getting SIX in a throw of a dice.

Probability of getting a Jack in one draw of a

card from a peck of 52 cards.

In a Simple Random Sampling, probability of

selecting a particular respondent.
 The Law of Large Numbers – Relative
Frequency Theory
PROBABILITY
 The Law of Large Numbers (LLN) says that the long-run
relative frequency of repeated independent events gets closer
and closer to a single value.

 We call the single value the probability of the event.

 Because this definition is based on repeatedly observing the

event’s outcome, this definition of probability is often called
empirical probability.
 The Nonexistent
Law of Averages
PROBABILITY
The LLN says nothing about short-run
behavior.

Relative frequencies even out only in the long

run, and this long run is really long (infinitely
long, in fact).

The so called Law of Averages (that an

outcome of a random event that hasn’t
occurred in many trials is “due” to occur)
doesn’t exist at all.
PROBABILITY
Time to apply!!! Application of the Relative Frequency Theory

Percentile Distribution of Candidates applied for What is the

MFC/MBE Course
probability
CAT Percentile No. of Candidates
Less than 20 136 that a
20-30 153 candidate
30-40 172
selected at
40-50 252
50-60 333
random will
60-70 412 have a CAT
70-80 565 percentile
80-85 332
between 90-
85-90 344
90-95 381 95?
95-100 310
Total 3,390
PROBABILITY Personal Probability
In everyday speech, when we express a
degree of uncertainty without basing it on
long-run relative frequencies, we are stating
subjective or personal probabilities.

Personal probabilities don’t display the kind of

consistency that we will need probabilities to
have, so we’ll stick with formally defined
probabilities.
PROBABILITY
Time to apply!!! Application of the Personal Probability Theory

Dare to predict Stock

Market!!!
PROBABILITY Application of the Personal Probability Theory
PROBABILITY What is the
probability that
Kshitiz will join
Harley Davidson
Riders Club??
PROBABILITY But, we are in search for ……

…More Generic
Framework for the
Probability !!!
PROBABILITY Probability Axioms...

 Probability is defined as a function P from

subsets of outcome space  that is F, to the
real line  that satisfies following conditions:
1. Non-negativity: P(A)  0

2. Additivity: if AB= then P(AB) = P(A) + P(B)

3. Probability of whole space is 1. P() = 1

PROBABILITY Basic Properties of Probabilities

Again, the probability of an event reports the likelihood of the

event’s occurrence. We write P(E) for the probability of the
event E, and 0 ≤ P(E) ≤ 1.
PROBABILITY Some Basic Relationships of Probability

There are some basic probability relationships that

can be used to compute the probability of an event
without knowledge of all the sample point probabilities.

Complement
Complement of
of an
an Event
Event

Union
Union of
of Two
Two Events
Events

Intersection
Intersection of
of Two
Two Events
Events

Mutually
Mutually Exclusive
Exclusive Events
Events
PROBABILITY Complement of an Event

The
The complement
complement of of event
event A
A is
is defined
defined toto be
be the
the event
event
consisting
consisting of
of all
all sample
sample points
points that
that are
are not
not in
in A.
A.
cc
The
The complement of A is denoted by A ..
complement of A is denoted by A

Event A Ac Sample
Space U

1 = A +Ac
1 – A =Ac
PROBABILITY Union of Two Events

The
The union
union of
of events
events AA and
and BB is
is the
the event
event containing
containing
all
all sample
sample points
points that
that are
are in
in A
A or
or BB or
or both.
both.

The
The union
union of
of events
events A
A and
and BB is
is denoted
denoted by A B
by A B

Sample
Event A Event B Space S
PROBABILITY Intersection of Two Events

The
The intersection
intersection of
of events
events A A and
and BB is
is the
the set
set of
of all
all
sample
sample points
points that
that are
are in
in both
both A
A and
and B. B.

The
The intersection
intersection of
of events
events A
A and
and BB is
is denoted
denoted by
by A 
A 

Sample
Event A Event B Space S

Intersection of A and B
PROBABILITY Addition Law

The
The addition
addition law
law provides
provides aa way
way to
to compute
compute the
the
probability
probability of
of event
event A,
A, or
or B,
B, or
or both
both AA and
and BB occurring.
occurring.

The
The law
law is
is written
written as:
as:

P(A B) = P(A) + P(B) - P(A  B

PROBABILITY Mutually Exclusive Events

Two
Two events
events are
are said
said to
to be
be mutually
mutually exclusive
exclusive ifif the
the
events
events have
have no
no sample
sample points
points in
in common.
common.

Two
Two events
events are
are mutually
mutually exclusive
exclusive if,
if, when
when one
one event
event
occurs,
occurs, the
the other
other cannot
cannot occur.
occur.

Sample
Event A Event B Space S
PROBABILITY Mutually Exclusive Events

IfIf events
events A
A and
and BB are
are mutually
mutually exclusive, P(A 
exclusive, P(A  B
B == 0.
0.

The
The addition
addition law
law for
for mutually
mutually exclusive
exclusive events
events is:
is:
P(A B) = P(A) + P(B)

there’s no need to
include “- P(A  B”
PROBABILITY Conditional Probability

The
The probability
probability of
of an
an event
event given
given that
that another
another event
event
has
has occurred
occurred is
is called
called aa conditional
conditional probability.
probability.

The
The conditional
conditional probability
probability of
of A
A given
given BB is
is denoted
denoted
by
by P(A|B).
P(A|B).

A
A conditional
conditional probability
probability is
is computed
computed as
as follows
follows ::
P( A  B)
P ( A| B ) 
P( B)
PROBABILITY Multiplication Law

The
The multiplication
multiplication lawlaw provides
provides aa way
way to
to compute
compute the
the
probability
probability of
of the
the intersection
intersection of
of two
two events.
events.

The
The law
law is
is written
written as:
as:

P(A B) = P(B)P(A|B)

PROBABILITY Independent Events

IfIf the
the probability
probability ofof event
event A
A is
is not
not changed
changed byby the
the
existence
existence of of event
event B,
B, we
we would
would saysay that
that events
events AA
and
and BB areare independent.
independent.

Two
Two events
events A
A and
and BB are
are independent
independent if:
if:
P(A|B) = P(A) or P(B|A) = P(B)
PROBABILITY Summarizing the laws of Probability …
PROBABILITY Laws of Probability ...
Additive Law:
◦ If A and B are two events, then

P ( A B ) = P ( A ) +P ( B ) - P ( A B )
◦ If events A and B are mutually exclusive events, then

P ( A  B ) = P (A) + P (B )
PROBABILITY Laws of Probability ...
Multiplicative Law:
◦ If A and B are events, then

P ( A B ) = P ( A ) P ( B | A ) = P (B )P ( A | B )
◦ If events A and B are independent, then

P ( A  B )  P ( A)P (B )
◦ The conditional probability of the event A given the event B is -

P ( A B )
P(A| B ) =
P (B )
PROBABILITY

Now, it is the time of application…

 Quick look at the Permutation and
Combination…
PROBABILITY
 PERMUTATION:
 In general, if r objects are selected from a set of
n objects, any particular arrangement of these r
objects(say, in a list) is called a permutation.
 In other words, a permutation is an ordered
arrangement of objects.
 Calculation of Permutation
n!
n
pr  n(n  1)(n  2) (n  r  1) 
(n  r )!
PROBABILITY Please note that in Permutation…

The order matters!!!

 Quick look at the Permutation and
Combination…
PROBABILITY
 COMBINATION:
 When we ask for the number of combinations of
r objects chosen from a set of n objects, we are
simply asking “How many different subsets of r
objects can be chosen from a set of n objects?”
 In other words, a combination is NOT an
ordered arrangement of objects.
 Calculation of Combination

n!
n
Cr 
(n  r )!r!
PROBABILITY Please note that in Permutation…

The order does not matter!!!

PROBABILITY

Time to apply and

check our
understanding…
PROBABILITY Example No.1:

A bag contains 6 Red and 8 Green Balls.

(a) If one ball is drawn at random, what is the

probability that the ball is green?

(b) If two balls are drawn at random, what is the

probability that one is red and the other is green?

(c) If two balls are drawn at random, what is the

probability that FIRST is red and the SECOND is
green?
PROBABILITY Example No.2:

 Tickets are numbered from 1 to 100.

(a) If one ticket is drawn at random, what is the

probability that it is an even number?

(b) If two tickets are drawn at random, what is the

probability that one is multiple of 5 and the other is
greater than 75?

(c) If two tickets are drawn at random, what is the

probability that FIRST is multiple of 10 and the
SECOND is greater than 60?
PROBABILITY

You can do these questions

using the basic laws of
PROBABILITY!!!!!!!
PROBABILITY

PRACTICE…
PROBABILITY Problem 1

There are four defective transistors in a package of

ten. If two transistors are selected randomly one
after another, what is the probability of each of the
following?
(a) One defective and one good will be selected.
(b) Two defectives will be selected.
(c) At least one defective will be selected.
(d) Two good transistors will be selected.
PROBABILITY Problem 2

A small town has two ambulances. Records indicate

that the first ambulance is in service 60 % of the
time and the second one is in service 40 % of time.
What is the probability that ‑
•When an ambulance is needed, one will not be available?
•Both are not in service?
•When one calls for an ambulance, he gets it?
PROBABILITY Problem 3

The probability a salesman will make a sale to a

prospective customer is 0.30. Assuming
independence, what is the probability that he will
not make any sales on contacting two persons?
PROBABILITY Problem 4
An investment advisor has a portfolio of 80 shares: 50 blue‑chip; 20
growth and 10 speculative shares. Of the 50 blue‑chip shares, 30
have increased during past month; 10 out of 20 growth shares have
increased; and 5 speculative shares have increased their prices
during past month. If a share is selected at random from the
portfolio; determine the probability that ‑
•it will be a blue‑chip share that has not increased in price.
•it will be neither a growth share nor its price have increased in the past month.
•it will be a speculative share knowing that the share selected has not
increased in price.
PROBABILITY Problem 5
A and B appear in an interview for two vacancies. The probability of
A's selection is 1/7 and that of B's is 1/5. What is the probability
that
(a) only one of them will be selected?
(b) None of them will be selected?
(c) Both of them will be selected?
PROBABILITY Problem 6
Q.No.9: An auditor wants to audit car loans of a private finance company. For that
purpose, the company provides the following information:
Loan Loan Amount (Rs)
Duration 0-50,000 50,000-1,00,000 1,00,000 Above Total
Upto 12 Months 40 80 20 140
12-36 Months 70 75 110 255
Above 36 Months 25 10 70 105
Total 135 165 200 500

If the auditor selects a loan for audit purpose at random, what is the probability
that
(a) it is a loan for above 36 months and above Rs. 1,00,000 ?
(b) it is a loan for Rs. 50,000 - Rs. 1,00,000 and for a period more than 12 months?
(c) it is a loan for Rs. 0 - 50,000 or for a period upto 12 months?
PROBABILITY Problem 7

 A company is planning to celebrate its Golden Jubilee during the

present year. For that a committee is constituted and its
chairperson is to be selected from its two Delhi Offices. In one
office, there are 20 male employees and 40 female employees
and in another office, there are 40 male employees and 30
female employees. Suppose that an office is selected at random,
what is the probability that a female employee is selected as a
chairperson of the Golden Jubilee Celebration Committee?