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Mean Variance and Standard Deviation of Discrete Random Variables

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james rey saludares
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29 views8 pages

Mean Variance and Standard Deviation of Discrete Random Variables

Uploaded by

james rey saludares
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Mean, Variance and

Standard Deviation of
Discrete Random Variables
This presentation will cover the concepts of mean, variance, and standard
deviation for discrete random variables. These concepts are fundamental
to understanding probability distributions and analyzing data.

by JAMES REY SALUDARES


Definition of Discrete Random Variable
What is a discrete random variable? Examples
A discrete random variable is a variable whose value can 1) Number of heads in 4 coin flips: 0, 1, 2, 3, 4. 2) Number of
only take on a finite number of values or a countably infinite defective items in a sample of 10: 0, 1, 2, ..., 10. 3) Number of
number of values. These values are usually integers, but they cars passing a point on a highway in an hour: 0, 1, 2, ...
can also be a finite number of other values. Examples
include the number of heads when flipping a coin four
times, the number of cars passing a certain point on a
highway in an hour, or the number of defective items in a
sample.
Expected Value (Mean)
1 Definition 2 Calculation
The expected value (mean) of The expected value (mean) is
a discrete random variable is calculated by summing the
the average value of the products of each value and
variable over many trials or its probability.
observations.

3 Formula
E(X) = Σ (x * P(x))
Variance
Definition Calculation
The variance measures how Variance is calculated by
spread out the values of a finding the average of the
discrete random variable are squared differences between
from its mean. each value and the mean.

Formula
Var(X) = E[(X - E(X))^2] = Σ (x - E(X))^2 * P(x)
Properties of Variance

Non-negative Zero Variance


Variance is always non-negative. It If all the values of a random
cannot be negative. variable are equal, then its variance
is zero.

Linearity
The variance of a linear
transformation of a random
variable is equal to the square of
the constant multiplied by the
original variance.
Standard Deviation
Definition
The standard deviation is the square root of the variance.
It measures the average deviation of the values of a
Formula
discrete random variable from its mean. SD(X) = fVar(X) = fΣ (x - E(X))^2 * P(x)

1 2 3

Calculation
The standard deviation is calculated by taking the square
root of the variance.
Interpretation of Standard
Deviation
Spread of Data
A larger standard deviation indicates that the values of the
1 random variable are more spread out from the mean. A
smaller standard deviation indicates that the values are
clustered closer to the mean.

Risk and Uncertainty


Standard deviation is a measure of risk or uncertainty. In
2
financial applications, a higher standard deviation implies
higher volatility and risk.
Applications and Real-World Examples

Business
1

Finance
2
Analyzing stock prices, portfolio risk, and investment returns.

Quality Control
3 Measuring the variability of manufacturing processes to ensure
consistent quality.

Research
4 Analyzing experimental data, conducting statistical tests,
and drawing conclusions.

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