Qm1a – Solutions

1.
(a) True or false: 𝑃(𝐴 ∩ 𝐵) ≤ minimum (𝑃(𝐴), 𝑃(𝐵)) . Justify your answer.
True
𝑃(𝐴 ∩ 𝐵) ≤ 𝑃(𝐴) (1)
𝑃(𝐴 ∩ 𝐵) ≤ 𝑃(𝐵) (2)

By combining equation (1) and (2) we have following:

𝑃(𝐴 ∩ 𝐵) ≤ minimum (𝑃(𝐴), 𝑃(𝐵))

(b)True or false: If 𝐸(𝑋) > 0, then 𝑋 cannot take negative values. Justify your answer.
False
Consider, as an example, the following probability distribution function:

𝑋 −1 1
𝑃(𝑋) 0.3 0.7
𝐸(𝑋) = −1 × 0.3 + 1 × 0.7 = 0.4. In this case (𝑋) > 0, but 𝑋 is taking a negative
value −1.

(c) If 𝑋 and 𝑌 are independent and normally distributed with the same mean but Var(X) = 2𝑉𝑎𝑟(𝑌)
, then compute 𝑃(𝑋 > 𝑌) .

Given that 𝑋 and 𝑌 follows normal distribution.

Let 𝐸[𝑋] = 𝜇 and Var(X) = 2𝜎 Then from given condition we have following:
𝑋 ∼ 𝑁(𝜇, 2𝜎 )
𝑌 ∼ 𝑁(𝜇, 𝜎 )
Then, 𝑋 − 𝑌 ∼ 𝑁(0,3𝜎 )
𝑃(𝑋 > 𝑌) = 𝑃(𝑋 − 𝑌 > 0) = 0.5 by symmetry of the normal distribution.

(d) The expected time taken to complete a task is 10 minutes and variance is 12 minutes. If the
time taken to complete the task is known to be uniformly distributed, what is the probability that
the task will be completed within 12 minutes?

Let 𝑇 denote the time required to complete a task. Let, 𝑇 ∼ 𝑈[𝛼, 𝛽].
𝛼+𝛽
𝐸[𝑇] = = 10
2
( )
Var(X) = = 12
Solving the above two equations we get 𝛼 = 4, and 𝛽 = 16
12 − 4 8
𝑃(𝑇 < 12) = =
16 − 4 12
(e)The waiting time for an item of a certain product type to break down is believed to follow an exponential
distribution with mean = 10 days. You are monitoring two independent items of the product. Given that both
the items have not broken down in the past 10 days and are still working, what is the probability that at least
one 0𝑓 them will break down within the next 5 days?

Let 𝑇 denote the waiting time for an item of a certain product type to break down.
Given 𝐸(𝑇) = = 10 ⇒ 𝜆 =
𝑇 ∼ 𝑒𝑥𝑝 ( )
For each item, probability that it does not breakdown in the next 5 days is given by
𝑃(𝑇 > 15|𝑇 > 10) = 𝑃(𝑇 > 5) = 1 − 𝑃(𝑇 < 5) = 1 − (1 − 𝑒 / ∗ ) = 𝑒 /
For two independent items of product:
Probability that at least one of them will break down in next 5 days
= 1 − Probability that none of them will break down in next 5 days = 1 − 𝑒 / × 𝑒 /
=
0.6321

2.
Financial Instrument

Figure 1: Financial Instrument Decision Tree

Notations: R : Recession, NR : No Recession, D : Default, ND : Not Default,

(a) Given that the economy will not be in recession next year, what is the conditional probability
that exactly 2 borrowers will default?

Probability that exactly 2 borrowers will default given that the economy will not be
5
recession = × (0.2)2 × (0.8)3 = 0.2048
2
(b) What is the unconditional probability that no borrower defaults next year?
Probability that no borrower default = P (R) × P (ND|R) + P (N.R.) × P ( ND | NR )
= 0.3 × (0) + (0.7) × (0.8) = 0.229376
(c) What is the unconditional probability that 4 or more borrowers will default next year?

P(4 or more default) = P (R)×P (4 or more default |R)+P (NR)× P (4 or more default | NR )
5
= 0.3 × 1 + (0.7) × [ × (0.2) × (0.8) + (0.2) ] = 0.304704
4
3. Dart throw problem

(a) Suppose 𝑋 denotes the number of points scored in one throw. What is the distribution of 𝑋?
Area of region for getting 50 points = 𝜋 × 1 = 𝜋
Area of region for getting 30 points = 𝜋 × 2 − 𝜋 × 1 = 3𝜋
Area of region for getting 20 points = 𝜋 × 3 − 𝜋 × 2 = 5𝜋
Total area = 9𝜋
 Its given that probability of hitting a region is proportional to its area, so distribution
of 𝑋 is as follows:
X 20 30 50
P (X) 5/9 3/9 1/9

(b) Suppose 𝑌 is the maximum score in 10 independent throws. What is the distribution of 𝑌?
𝑌 is the maximum score in 10 independent throws. Possible values for : 20, 30, and 50.
Case 1: 𝑌 = 50
Prob. that at least one throw in the innermost region
= 1‐P(no throw in the innermost region) = 1 − = 0.692
Case 2: 𝑌 = 20
Prob. that all throws in the outer most region = = 0.0028
Case 3: 𝑌 = 30
𝑃(𝑌 = 30) = 1 − 𝑃(𝑌 = 50) − 𝑃(𝑌 = 20) = 1 − 0.692 − 0.0028 = 0.3052
Distribution of 𝑌:
Y 20 30 50
P(Y) 0.0028 0.3052 0.692

c) What is the expected number of hits to the innermost circle (i.e. where you score 50) in 10
independent throws?
Expected number of hits in innermost circle in one throw = 1 × + 0 × =
Expected number of hits in innermost circle in ten independent throws = 10 × =

(d) Suppose that in 10 independent throws you have never hit the outermost ring (i.e. where you
score 20). In that case what is your expected score?
In this case possible values of X : 30 and 50.
Total area = 4π

P(X = 30) = =

P(X = 50) = =

So modified distribution of X:
X 30 50
P(X) 3 1
4 4

Expected score in one throw = 30 × + 50 × = 35

Expected score in ten independent throws = 35 ×10 = 350
4.
Quality Control Process problem
Let 𝑋 denote the length of screw produced by machine 𝐴. Given, 𝑋 ∼ 𝑈(98,102)
Let 𝑌 denote the length of screw produced by machine 𝐵. Given, 𝑌 ∼ 𝑈(97,103)

𝑃(𝐴) = 0.6

(a) What is the average length of a screw given it is produced by Machine 𝐴? What is
the average length of a screw given it is produced by Machine 𝐵? What is the average
length of the screws produced by the factory?
Average length of a screw produced by Machine 𝐴 = 𝐸[𝑋] = = 100
Average length of a screw produced by Machine 𝐵 = 𝐸[𝑌] = = 100
Average length of a screw produced by factory = 100 × 0.6 + 100 × 0.4 = 100

(b) What proportion of screws produced by the factory are acceptable by the quality
control process?
Acceptable length of range is between 99𝑐𝑚 and 101 cm.
For Machine 𝐴:
101 − 98 3
𝑃(𝑋 < 101) = =
102 − 98 4
99 − 98 1
𝑃(𝑋 < 99) = =
102 − 98 4
3 1 1
𝑃(99 < 𝑋 < 101) = 𝑃(𝑋 < 101) − 𝑃(𝑋 < 99) = − = = 0.5
4 4 2
For Machine 𝐵:
101 − 97 2
𝑃(𝑌 < 101) = =
103 − 97 3
99 − 97 1
𝑃(𝑌 < 99) = =
103 − 97 3
2 1 1
𝑃(99 < 𝑌 < 101) = 𝑃(𝑌 < 101) − 𝑃(𝑌 < 99) = − = = 0.33
3 3 3
Proportion of screw produced by factory within acceptable limit
= 𝑃(99 < 𝑋 < 101) × 𝑃(𝐴) + 𝑃(99 < 𝑌 < 101) × 𝑃(𝐵) = 0.5 × 0.6 + 0.33 × 0.4 = 0.432.

(c) Suppose one screw produced by Machine A and another screw produced by Machine
𝐵 are randomly chosen. What the expected value of their difference of length? What
is the standard deviation of the difference of their length?

Expected value of the difference in length = 𝐸[𝑋 − 𝑌] = 𝐸[𝑋] − 𝐸[𝑌] = 100 − 100 = 0
( )
Var(X) = = = 1.33
(103 − 97) 36
𝑉𝑎𝑟(𝑌) = = =3
12 12
𝑉𝑎𝑟(𝑋 − 𝑌) = 𝑉𝑎𝑟(𝑋) + 𝑉𝑎𝑟(𝑌) = 3 + 1.33 = 4.33
Hence SD = √4.33 = 2.08.
(d) Suppose one screw produced by Machine A and another screw produced by Machine B are
randomly chosen. Suppose both of them were found to be acceptable by the quality control process.
What is the expected value of their difference of length?
Expected length of an acceptable screw from Machine A = (101 + 99)/2 = 100 Expected
length of an acceptable screw from Machine B = (101 + 99)/2 = 100
Expected value of the difference of length of acceptable screws from Machine A and Machine B
= 100 ‐ 100 = 0.

5.
New educational institute campus Problem
Let 𝑋 denote the amount of oxygen produced by tree 𝑖 of type 𝐴 tree in one year.

5, 𝑤𝑖𝑡ℎ 𝑝𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦. 95
𝑋 ∼
0, 𝑤𝑖𝑡ℎ 𝑝𝑟𝑜𝑏𝑎𝑏𝑖𝑙𝑖𝑡𝑦. 05

(a) What is the expected amount of oxygen (in people equivalents per year) from any
newly planted tree of species 𝐴? What is the standard deviation?
𝐸[𝑋 ] = 5 × 0.95 = 4.75
𝑉𝑎𝑟(𝑋 ) = 5 × 0.95 × 0.05 = 1.1875.
𝑆𝐷(𝑋) = √11875 = 1.0897.

(b) What is the probability that 215 newly planted trees of species A will result in enough
oxygen per year for 1000 people once the surviving trees are fully grown?
Let 𝑋 = 𝑋 + 𝑋 + ⋯ + 𝑋
By CLT, (approximately) 𝑋 ∼ 𝑁(𝑛𝜇, 𝑉𝑎𝑟 = 𝑛𝜎 ) . In this case, 𝑛 = 215,
𝜇 = 𝐸[𝑋 ] = 4.75, 𝜎 = 𝑉𝑎𝑟(𝑋 ) = 1.1875

Hence, 𝑋 ∼ 𝑁(1021.25, 𝑉𝑎𝑟 = 255.3125) .

Minimum number of trees of type 𝐴 required to serve 1000 people = 1000/5 = 200.

𝑋 − 1021.25 1000 − 1021.25

𝑃 (𝑋 ≥ 1000) = 𝑃 ≥ = 𝑃(𝑍 ≥ −1.33) = 1 − 𝑃(𝑍 < −1.33) = 0.9082
√2553125 √2553125

(c) Based on a study, it was estimated that if 110 trees of species 𝐵 were newly planted then
there was only a 38% chance of generating the amount of oxygen enough for 1000 people in
a year once the surviving trees are fully grown. It was further found that 𝑖 115 trees of this
species were planted then there was about 86% chance of generating the amount of oxygen
enough for 1000 people in a year once the surviving trees are fully grown. What is the
estimated oxygen production rate of this new species in terms of person‐equivalent of
oxygen in a year? What proportion of this species will survive to grow fully?

Let tree of species 𝐵 produce 𝑟 people equivalent of oxygen per year and let its survival
rate be 𝑝.
Let 𝑌 denote the number of trees of type 𝐵 that will survive out of 𝑛 newly planted
trees of the same type.
BY CLT, 𝑌 ∼ (𝑛𝑝, 𝑆𝐷 = 𝑛𝑝(1 − 𝑝)) .
Case 1: Given : 𝑛 = 110

1000
𝑃 (𝑌 ≥ ) = 0.38
𝑟
𝑃( ≥ ) = 𝑃(𝑍 ≥ )
( ) ( ) ( )

= 1 − 𝑃 (𝑍 < ) = 0.38
( )

⇒ 𝑃 (𝑍 < ) = 0.62
( )

⇒ = 0.31 (3)
( )

Or,

= 110𝑝 + 0.31 110𝑝(1 − 𝑝). (4)

Case 2: Given : 𝑛 = 115 Similarly in in this case we have

𝑃 (𝑌 < ) = 1 − 0.86 = 0.14

𝑃( < ) = 𝑃(𝑍 < )

( ) ( ) ( )

= 𝑃 (𝑍 < ) = 1 − 0.86 = 0.14

( )

⇒ = −1.08 (5)
( )

Or,

= 115𝑝 − 1.08 115𝑝(1 − 𝑝). (6)

From (4) and (6) we get

5𝑝 = (1.08 × 115 + 0.31 × 110) 𝑝(1 − 𝑝),

Or 5 𝑝 = 14.833 1 − 𝑝,

. .
which implies that 𝑝 = = 0.898.

Hence from (6), 𝑟 = = 10.024.

× . . √ × × .

That is, approximately 𝑝 = 0.9, 𝑟 = 10.

Q‐1 (a)

P(H) = p, P(H) = Probability that head comes up in a toss.

P(T) = (1‐ p), P(T) = Probability that tail comes up in to toss.
Sample Space = {HHH, HHT, HTH, HTT, THH, THT, TTH, TTT}
It is given that tosses are independent. Hence, the probabilities for each outcomes are as below,

Out Comes Probability

P(HHH) p
P(HTH) p (1‐ p)
P(HHT) p (1‐ p)
P(THH) p (1‐ p)
P(HTT) p (1 − p)
P(THT) p (1 − p)
P(TTH) p (1 − p)
P(TTT) (1 − p)

Q‐1 (b)
We defined the following random variables:‐
X = Number of heads minus number of tails.
Y = Minimum (Number of heads, number of tails).
Out Comes No of No of X Y Probability
Heads Tails
P(HHH) 3 0 3 0 p
P(HTH) 2 1 1 1 p (1‐ p)
P(HHT) 2 1 1 1 p (1‐ p)
P(THH) 2 1 1 1 p (1‐ p)
P(HTT) 1 2 ‐1 1 p (1 − p)
P(THT) 1 2 ‐1 1 p (1 − p)
P(TTH) 1 2 ‐1 1 p (1 − p)
P(TTT) 0 3 ‐3 0 (1 − p)

Q‐1 (c)
Based on answer to 1b, X can take values in {−3, −1,1,3 } and Y can take values in {0,1}
Joint distribution of (X,Y) is given by specifying P(X=k, Y=r) where k can be any value in
{−3, −1,1,3 } and r can be any value in {0,1} . Now,
P(X=‐3, Y=0) = P(TTT) = (1 − p)
P(X=‐3, Y=1)= 0

P(X=‐1, Y=0) = 0
P(X=‐1,Y=1) = P(HTT)+P(THT)+P(TTH) = 3p(1 − p)

P(X=1,Y=0) = 0
P(X=1,Y=1) = P(HTH)+P(HHT)+P(THH) = 3p (1‐ p)

P(X=3,Y=0) = P(HHH) = p
P(X=3, Y=1) = 0

The joint distribution of X & Y can be summarized as in the table below.

 X=k
‐3 ‐1 1 3
Y=r 0 (1 − p) 0 0 p
1 0 3p(1 − p) 3p (1‐ p) 0

Q‐1 (d)
Let marginal distribution of X is,
X=k P(X=k)
‐3 (1 − p)
‐1 3p(1 − p)
1 3p (1‐ p)
3 p

Marginal distribution of Y is,

Y=r P(Y=r)
0 (1 − p) + p
1 3p(1 − p) + 3p (1 − p)

Q‐1 (e)
Cov (X, Y) = E X − E(X) (Y − E(Y)
= E(XY) – E(X)E(Y)……..(1)
For p = 0.5, the joint distribution (obtained in 1c) becomes:

X=k
‐3 ‐1 1 3
Y=r 0 0.125 0 0 0.125
1 0 0.375 0.375 0

So now,
E (X) = (using 1d) = (‐3) * .125 + (‐1)*.375 + (1)*.375 +3*.125 =0
This also implies E(X)*E(Y)=0
To compute E(XY), the Distribution of XY is as follows.
XY takes value 0 when Y=0, hence has probability =.125+.125= .250
XY takes value ‐3 when X=‐3, Y=1, probability =0
XY takes value ‐1 when X=‐1, Y=1, probability =.375
XY takes value 1 when X=1, Y=1, probability =.375
XY takes value ‐3 when X=3, Y=1, probability =0
Hence E(XY) = 0*.250 + (‐3)*0 + (‐1)*.375 +1*.375 + 3* 0 = 0
Cov (X, Y) = E(XY) – E(X)E(Y) = 0

Q‐1 (f)
Cov (X,Y) = 0 does not imply independence
If X,Y are independent, then P(X=k ,Y =r) = P(X=k)*P(Y=r) must hold for all values of k and r.
Note that P(X=‐3, Y=1) = 0, but P(X=‐3) = 0.125 and P(Y = 1) = 0.75
So, P(X=‐3, Y= ) ≠ P(X=‐3)* P(Y = 1)
So, X & Y are not independent
Q‐2
S = {1,2,3,4,5,6}
Let p = Probability of occurrence of 1 in a throw. Then it is given that probability of occurrence of
2,3,4,5,6 are respectively 2p,3p, 4p,5p,6p.
Now,

P(X = K) = 1

p+2p+3p+4p+5p+6p = 1

21p = 1

p=

Q‐2 (a)
X = Value of face that comes up in jth throw of die. It’s pmf is given by:

X =k P(X = k)
1 1
21
2 2
21
3 3
21
4 4
21
5 5
21
6 6
21

Q‐2 (b)
E X =∑ X P(X = k)

= 1* + 2* + 3* + 4* + 5* +6*

E X = 4.33
Now,
Variance X =E (X ) –(E X )
 (X = k) P(X = k)
1 1
21
4 2
21
9 3
21
16 4
21
25 5
21
36 6
21

E (X ) = 1* + 4* + 9* + 16* + 25* + 36*.

E (X ) = 21
So, Now…
Variance X = E (X ) –(E X )
= 21‐ (4.33)
= 21‐ 18.74
Variance X = 2.251

Q‐2 (c)
X = 𝑋 + 𝑋 + …+ 𝑋 = Sum of outcomes from 10 throw of the die
E(X) = E(𝑋 ) + E(𝑋 ) + …+ E(𝑋 )
We know…E (𝑋 ) = for j = 1,2,…,10
So,
E(X) = 10* E (𝑋 )
= 10 *
=
= 43.33
All the throws are independent.
So, Cov (𝑋 , 𝑋 ) = 0 where i≠j
Since all the covariance terms become zero.
Var (X) = Var (𝑋 ) + Var (𝑋 ) + . . . + Var (𝑋 )
Var (𝑋 ) = 2.237 When j = 1,2,…,10
Var (X) =10 Var (𝑋 )
= 10 * 2.251
= 22.51
Q‐2 (d)
For X = 10
Each throw can take a minimum value of 1. Hence the event {X=1} is same as
{𝑋 =1, 𝑋 =1,…, 𝑋 =1}
Further, since tosses are independent, P (X=10) = P (𝑋 =1) * P (𝑋 =1) * …..* P (𝑋 =1)
= * *….* (10 times)
=( )

Question 3:
Solution:‐
Define the random variable:‐
- X = Time to failure of machine after every repair.
- It is given that X is exponentially distributed.
So, X ~ Exp (λ)

 It is also given that , P(X<=20) = ½

 For Exponential Distribution, P (X <= a) = 1 ‐ e‐λa , where a > 0

So, P (X <= 20) = 1 ‐ e‐20.λ = 0.5
∴ 1 ‐ e‐20.λ = 0.5
∴ e‐20.λ = 0.5
∴ ‐20 . λ = log 0.5
∴ λ = 0.0346
X ~ Exp (λ) ~ Exp (0.0346)

(a): what is the expected time for the machine to fail?

E(X) = 1/ λ=1/ 0.0346 = 28.854 Hrs.

(b): Suppose Y = the time from now until the next failure given that it has been working for 100 hrs.
Due to “memory less property”, Y would again follow the same exponential distribution as X defined
in part (a).

∴ Expected time to failure from now until next failure, knowing that it has worked for 100 Hrs
=E(Y) = 1/ λ = 28.854 Hrs.

(c) Let X be as defined in (a). Then we want

P(X >= 40) = 1 – P(X < 40)
= 1 – [ 1 – e‐40.λ ]
= e‐40.λ = e‐40 * 0.0346 = 0.2505
25.05% chance that it would work for at least 40 more hours after a repair.

(d) If a new repairing technology is introduced that reduces the probability of failure within 20 hours
of repair to 25%, then probability of failure within 20 hours of repair = 0.25
Z = The time to failure after the (new) repair.
Assuming that the memory less property still holds, Z~ Exp (λ’)
𝑃(𝑍 < 20)= 0.25
1 ‐ e‐20.λ = 0.25 ∴ e‐20.λ = 0.75
∴ ‐20 . λ = log 0.75 ∴ λ = log 0.75 /( ‐20)
∴ λ = 0.0143
- Y ~ Exp (λ’) ~ Exp (0.0143)
 - Expected time for machine to fail after the first repair is exponentially distributed.
- E(Y) = 1/ λ’ = mean time between failures.
∴ E(Y) = 1/ 0.0143 = 69.52 Hrs.

Question 4:
Solution 4:
 Let define the random variable:‐
- X = Total number of visa applicants arriving at the counter on any given day.

 Assumption:‐
- X follows the Poisson distribution.
So, X ~ Pois (λ)
- where λ = the average number of applications received by the consulate in a day = 10
(given)
∴ X ~ Pois (10)
- Probability for Poisson distribution is given by:
P(X = k) = e‐λ . λk / k! , for k=0,1,2,……,infinity … (A)

(a) Let X be defined as above.

- Probability of at least one rejection in a day = P(X > 4) = 1– P(X <= 4)
= 1 – P(X=0) – P(X=1) – P(X=2) – P(X=3) – P(X=4)
Using formula in (A)
P(X >4) = 1 – e‐10 . 100 / 0! – e‐10 . 101 / 1! – e‐10 . 102 / 2! – e‐10 . 103 / 3! – e‐10 . 104 / 4!
= 1 – e‐10 [100 / 0! + 101 / 1! + 102 / 2! + 103 / 3! + 104 / 4!]
= 1– e‐10 [1+10+50+166.6+416.67]
= 0.9707 ……………………………………………………….(B)

(b) Let define the random variable,

Y = No of applicants receiving visa in a day.
If X is as defined above then:
o Y = X; if X <= 3
= 4; if X > 4
Average no of applicants receiving visa in a day
=E[Y] = Σ y * P(Y=y) = 0*P(Y=0)+1*P(Y=1)+2*P(Y=2)+3*P(Y=3)+4*P(Y=4)
Note that P(Y=y)= P(X=y) for y<=3 and
P(Y=4) = P(X>=4) = P(X=4)+P(X>4)
So, E[Y]= 0*P(X=0) +1*P(X=1) +2*P(X=2) +3*P(X=3) + 4*(P(X=4) +P(X>4))
= 0*(e‐10 *100 / 0!) +1*(e‐10*101 / 1!) +2*(e‐10*102 / 2!) +3*(e‐10*103 / 3!) +4*(e‐10 *104 /
4!) + 4(0.9707)
………………………(From equation and result B)
= 0.1033 + 4[0.9707] = 0.1033+3.8829= 3.9862
Question 5: ‐
Solution:‐
Premium, P(x) = 0.1* (10,000 ‐ x) + 500; if x < 10,000
= 500 ; if x >= 10,000………………………………(A)
- Where “x” miles have been driven.

 Let define the random variable, X = Miles driven by a car insured by the company as of
beginning of policy year.
 It is given that X ~ U(0, 15000) (i.e. uniform distribution)

(a)What percentage of cars insured by the company pay a premium less than Rs.1000/‐?
‐Let X be as defined above. Then, we want to find P(P(X) < 1000)
Note that P(X) =500 is <1000 if X>=10000.
Also, note that P(X) = (0.1* (10,000 ‐ X) + 500) < 1000 if X>5000.
In summary, P(X) < 1000 is same as the event (X>5000)..
Therefore, P (P(X) < 1000) = P (X>5000) = 1 – P(X <= 5000) which since X~U(0,15000)
= 1 – (5000/15000) = 1 – 1/3= 2/3
So 2/3rd of cars pay a premium less than 1000.

(b) Given that a car paid premium less than Rs.1000/‐, what is the probability that it had driven more
than 10,000 miles?
We want to find P(X > 10,000 | P(X) < 1,000)
We saw in part (a) that P(X)<1000 is as same as X>5000.
So, P(X > 10,000 | P(X) < 1,000) = P(X > 10,000 | X>5000)
= P(X > 10,000 ∩ X > 5,000) / P(X>5000)= P(X>10000)/P(X>5000)
= (5000/15000) / (10000/15000)
= 0.5

Question: 6.
Let X=weekly salary paid to an employee of the small company.
Then it is given that X follows Normal with mean = $500 and sd= $ 100.
i.e. E(X)=  =$500 , sd(X)=  = $100.
So X ~ Normal (500,variance=100^2)

[ note since ( ‐ 3 )=200 is still positive. The numbers of negative values are very less and can be
safely neglected.]

a) What percentage of employees make more than $400 per week?

P(X≥400)=P((X‐)/ >($400‐)/)
=P (Z>(400‐500)/100) , where Z~N(0,1)
=P(Z>‐1) =1‐P(Z<‐1) =1‐P(Z>1) =P(Z<1) =0.8413

b) What’s the 99th percentile of the weekly salaries distribution?

We want x such that P (X≤x)=0.99.
So, P((X‐)/ ≤ (x‐)/)= P (Z ≤ (x‐500)/100) = 0.99
From standard normal table we get, (x‐500)/100=2.33
So x=733
 99th percentile of the weekly salary is 733.
c) If there is a 5% salary increase for the next year , what will be the distribution of weekly salaries for
next year?
Let Y denote the weekly salary of an employee of the company during the next year.
Then it is given that Y =1.05 x
E(Y) =1.05E(X) = 525.
V(Y) =V (1.05 X) =1.05^2 * V(X) =1.05^2 *100^2 = 11025
From property of normal distribution, we know (1.05X) (which is a linear function of X) will also
follow a normal distribution.
Hence, Y ~ Normal (525, variance=11025).

Question: 7
Answer 7
Let X denotes the tip that the tourist guide receives.
It is given that P (X=x) = 1/3. For x in {0,100,200)
Assumption: The tips given by tourists are independent of each other.

a) What is the expected value and standard deviation of income from each tourist?

X 0 100 200
P(X) 1/3 1/3 1/3

E (X) = P ( x=0) . 0+P(x=100)100 + P(X = 200)200

= 1/3 X 100 + 1/3 X 200
= 1/3 X 100 + 1/3 X 200
= 100

V(x) = 𝜎 2x =E(x2 ) – [E(X)]2

= P ( X=0)*02 + P ( X=100)*1002 + P (X=200)*2002 – 1002
= 1/3 [10000+40000] – 10000
= 6666.67

Sd (x), 𝜎𝑥 = 81.65.

b) If she guides 5000 tourists during a year , what is the expected value and standard deviation of her
total income? Using Central Limit Theorem (CLT), find probability that her will be less than
Rs.5,15,000.

Let Xi denotes the tip from ith tourist. It is given that Xi are identically distributed Assuming that tips
given different tourists are independent of each other, we have X i’s are independent and identically
distributed

Hence we can apply CLT or Central Limit Theorem.

Accordingly, the total income from 5000 tourists would be given by the random variable X, defined as
X = X1+ X2 + X3 + ‐‐‐‐‐‐‐‐‐‐+X5000

E[X1 ]= µ = 100 , SD[X1 ] =𝜎 = 81.65

 E (X) = E (X1+ X2 + X3 + ‐‐‐‐‐‐‐‐‐‐+X5000)
= E (X1)+E (X2) +‐‐‐‐‐‐‐‐‐‐‐+E( X5000)
= µ + µ +‐‐‐‐‐‐‐‐‐‐‐‐‐ + µ (5000 times)
= 5000 µ= 500000
V ( X ) = V (X1+ X2 + X3 + ‐‐‐‐‐‐‐‐‐‐+X5000)
using independence = V (X1)+ V(X2) + ‐‐‐‐‐‐‐‐‐‐+V(X5000)
= 5000 𝜎2= 5000* (81.65)^2
𝑆𝐷(𝑋) = 𝜎 x = 5773.5

Using Central limit theorem, (X‐ E(X)) /SD(X) is approximately N(0,1).

Or (X ‐ n)/(n) is N(0,1) approximately where n=5000, µ= 5000, =81.65
Therefore,
P (X<515000) =  (515000‐50000/5773.50), where  is the standard normal cumulative
distribution function.
= (2.598)
Using table, (2.598) = 0.9953. So probability that the income will be less than 515000 is
approximately 99.53%.

c) Suppose she wants to ensure less that probability of her income falling below
515,000 should be less than 5%. Using CLT, determine whether she can achieve this target by
planning to guide 5250 tourists?

Now let income from 5250 tourists be denoted by X= X1+X2+‐‐‐‐‐‐‐+X5250

As in (b), since Xi’s are independent and identically distributed (iid), we can use CLT
i.e. (X ‐ n)/(n) is N(0,1) approximately where n=5250, µ= 5000, =81.65
Now, we want to find P(X<515000)

P( (X ‐ n)/(n) <(515000 ‐ n)/(n))

 P( (X‐ 525000)/5916.1 < (51500‐52500)/5961.1)
P (Z < ‐1.69)
1 – P (Z < 1.69)
 1‐ 0.9545
0.0455

 P ( X < 515000) = 0.0455

X<515000 is 4.55%.

Yes, she will be able to achieve her target by planning to guide 5250 tourists.
Question 1.
Answer the following questions by providing a brief justification for your answer.
a.
TRUE
Let, X= % voting for A
Y= % voting for B
N (XC ∩ YC)= 100 – {n(X)+n(Y) – n(X∩Y)}
≥100‐ {n(X)+n(Y) = 100‐ 60 ‐ 20 = 20
Therefore, number of people not voting for A nor for B is at least 20%.

b.
FALSE
A & B are mutually exclusive implies P(A∩B) = 0 ≠ P(A) * P(B) >0.
Therefore they are not independent.

c.
P(X + Y) > 0
P(X + Y > 0) = 1 ‐ P (X + Y = 0)
= 1 – P(X = 0, Y = 0)
= 1 – P(X=0)*P(Y=0) {Both are independent}
= 1 ‐ [(0.5)5 * (0.8)5 ]
= 1 – [0.01024]
= 0.98976

d.

30 Minutes
7:30 A.M. 8:00 A.M.

Let, X be the random variable representing her waiting time in minutes.

X ~ U [0 , 30]

E[X] = = 15 minutes

e.

Wait time for A = remaining service time for B.

Since service time is exponential, the fact that B is being served for last 5 minutes is
irrelevant due to memory less property.
P( X > 5+t І X > 5) = P(X > t)
Hence, E [Wait time] =10 Minutes

f.
Let, X represent the exam score of a student chosen at random.
X ~ N (mean=75, Standard deviation=2.5)
Y= 99th Percentile.
P(X≤Y) = 0.99

P( ≤ ) = 0.99
. .
 From table P(Z)=0.99 is for Z=2.33 approx

= 2.33, Y= 75 + 2.33(2.5)
.

𝑌 = 80.825

g.
P (Out of 5 interested in internship 2 get selected)

∗
= = 2/23 = 0.0870 = 8.7%

h.

Given P(H)=0.25 , P(T)=0.75

P[{HTHH,TTHH}] = [{(0.25*0.75*0.25*0.25)+ (0.75*0.75*0.25*0.25)}]
=0.01171875 + 0.03515625
=0.046875

i. FALSE
Given mean = = 2, Therefore λ = 0.5
X ~ Exp(0.5)
So, P(X≤Y) = 1 – e‐λ*y = 0.5
= 1 – e‐0.5*y = 0.5
/
𝑒 = 0.5
= −log 0.5 = log 2
y =2* log 2 < 2

j. Bag contains equal number of A & B. Therefore P(A) = P(B) = 0.5

Now, P( H | A) = coin belong to A and gives head

( ∩ ) ( І )∗ ( )
Therefore, P(A | H) = = ( І )∗ ( ) ( І )∗ ( )
( )
. ∗ .
= = 0.33 or 33.33%
( . ∗ . ) ( . ∗ . )

Question 2.

a.
Let X is a Random Variable denotes number of Classical Music CD’s Sold.
Let Y is a Random Variable denotes number of Classical Music CD’s Sold.

Classical Music (x) 0 500 1000

Probability
0.1 0.2 0.7
P(X=x)

Rock Music (y) 0 1000 2000

Probability P(Y=y) 0.2 0.3 0.5
Let z=x+y is a Random Variable denotes total number of Classical + Rock Music CD’s Sold.

Sales of CDs across different days and types are independent,

So P(X=x, Y=y) =P(X=x)*P(Y=y)

x y P(Z=X+Y) = P(X=x, Y=y)

0 0 0.02
0 1000 0.03
0 2000 0.05
500 0 0.04
500 1000 0.06
500 2000 0.1
1000 0 0.14
1000 1000 0.21
1000 2000 0.35

Summarizing the above table we get,

z 0 500 1000 1500 2000 2500 3000

P(Z=z) 0.02 0.04 0.17 0.06 0.26 0.1 0.35

b. From part (a) we know the probability distribution of a single day sales, we can compute
Mean and SD from Part (a).
E (z) = ∑(𝑧) ∗ 𝑃(𝑍 = 𝑧) = 2100

Variance (z) = E (z2) ‐ (E (z)) 2

(z)2 0 250000 1000000 2250000 4000000 6250000 9000000

P(Z=z2) 0.02 0.04 0.17 0.06 0.26 0.1 0.35

E (z) 2 = 5130000, (E(z))2= 4410000 => Var(z) = (5130000)‐(4410000)

= 720000

SD (z) = 𝑉𝑎𝑟𝑖𝑎𝑛𝑐𝑒 (𝑧) = √720000= 848.5281

Let t = total sale for next 30 days,

E [t] = 30 * 2100 = 63,000; Var [t] = 30 *Var[z] = 21600000
SD (T) = √21600000 = 4647.58

c. Need to find P(t >=70,000). On observing the data, we know that t can only be a
multiple of 500. So, applying a correction factor, we need.
 [ ] ,
𝑃( [ ]
≥ )
.

,
= 𝑃(𝑍 ≥ )
.

By CLT, Z~N(0,1)
= 𝑃(𝑍 ≥ 1.4523) = 1- 𝑃(𝑍 ≤ 1.4523)
=0.0732

If you did not apply correction factor, you would compute

70,000 − 63000
𝑃(𝑍 ≥ )
4647.58

Question 3.
a.

X = No of students who pass Level 1

X ~Binomial (n = 3, p = 0.3)
3
∴ 𝑃(𝑋 = 𝑥) = ∗ (0.3) ∗ (0.7)
𝑥
x = {0, 1, 2, 3}
Y = No of students who pass Level 2
Y| X = x ~Binomial (n = x, p = 0.1)

Probability distribution of X:

X=x Probability Calculation Probability

3
0 𝑃(𝑋 = 0) = ∗ (0.3) ∗ (0.7) 0.343
0
3
1 𝑃(𝑋 = 1) = ∗ (0.3) ∗ (0.7) 0.441
1
3
2 𝑃(𝑋 = 2) = ∗ (0.3) ∗ (0.7) 0.189
2
3
3 𝑃(𝑋 = 3) = ∗ (0.3) ∗ (0.7) 0.027
3

b.
For this Joint Distribution
𝑃(𝑌 = 𝑦, 𝑋 = 𝑥) = 𝑃(𝑌 = 𝑦|𝑋 = 𝑥)𝑃(𝑋 = 𝑥)
𝑥 3
= ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7)
𝑦 𝑥

Where (y <= x) and x = {0, 1, 2, 3}

When y > x, 𝑃(𝑌 = 𝑦, 𝑋 = 𝑥) = 0

Therefore,
 𝑃(𝑌 = 1, 𝑋 = 0) = 𝑃(𝑌 = 2, 𝑋 = 0) = 𝑃(𝑌 = 3, 𝑋 = 0) = 𝑃(𝑌 = 2, 𝑋 = 1)
= 𝑃(𝑌 = 3, 𝑋 = 1) = 𝑃(𝑌 = 3, 𝑋 = 2) = 0
........................................(I)

0 3
𝑃(𝑌 = 0, 𝑋 = 0) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.343
0 0
1 3
𝑃(𝑌 = 0, 𝑋 = 1) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.3969
0 1
2 3
𝑃(𝑌 = 0, 𝑋 = 2) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.15309
0 2
3 3
𝑃(𝑌 = 0, 𝑋 = 3) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.019683
0 3
1 3
𝑃(𝑌 = 1, 𝑋 = 1) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.0441
1 1
2 3
𝑃(𝑌 = 1, 𝑋 = 2) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.03402
1 2
3 3
𝑃(𝑌 = 1, 𝑋 = 3) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.006561
1 3
2 3
𝑃(𝑌 = 2, 𝑋 = 2) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.00189
2 2
3 3
𝑃(𝑌 = 2, 𝑋 = 3) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.000729
2 3
3 3
𝑃(𝑌 = 3, 𝑋 = 3) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.000027
3 3

Joint distribution table:

p(x, y) X=0 X=1 X=2 X=3

Y=0 0.343 0.3969 0.15309 0.019683
Y=1 0 0.0441 0.03402 0.006561
Y=2 0 0 0.0081 0.000729
Y=3 0 0 0 0.000027

c. Hence find the marginal distribution of Y.

Marginal distribution of Y:
P(y=x) = ∑ 𝑃(𝑌 = 𝑦, 𝑋 = 𝑥)

Marginal
p(x, y) X=0 X=1 X=2 X=3 Probability of
Y
Y=0 0.343 0.3969 0.15309 0.019683 0.912673
Y=1 0 0.0441 0.03402 0.006561 0.084681
Y=2 0 0 0.0081 0.000729 0.002619
Y=3 0 0 0 0.000027 0.000027
Total ‐ ‐ ‐ ‐ 1

Question 4.

a.
 P(Qualified in the 4th attempt) = Fails in attempt 1, 2, 3 and then qualifies in 4 th attempt
Let X = Number of failures before qualifying
P(X=k) = (1‐p)k‐1 * p ; k=0,1,2,3,4,……
If X= 4, He qualifies in 4th attempt

P(X=4) = P(X=4│Self Study) * P(Self Study) + P(X=4│Coaching Class) * P(Coaching

Class) + P(X=4│Personalized Training) * P(Personalized Training)

P(X=4│Self Study) = (0.6)3 * (0.4) = 0.0864

P(X=4│Coaching Class) = (0.3)3 * (0.7) = 0.0189

P(X=4│Personalized Training) = (0.2)3 * (0.8) = 0.0064

∴ 𝑃(𝑋 = 4) = (0.0864 ∗ 0.7) ∗ (0.0189 ∗ 0.2) ∗ (0.0064 ∗ 0.1)

P(𝑋 = 4) = 0.0649

( │ ) ∗ ( )
b. P(Self study│X = 4) = ( )
. ∗ .
=
.
= 0.93189

Question 5.

a.

Let, A be the Random Variable representing completion time of

stage 1 ~ N (μ = 50, σ2 = 25)

B be the Random Variable representing completion time of

stage 2 ~ N (μ = 75, σ2 = 16)

C be the Random Variable representing completion time of

stage 3 ~ N (μ = 25, σ2 = 9)
D be the Random Variable representing completion time of
stage 4 ~ N (μ = 100, σ2 = 64)

Let X represents the RV, completion time of entire project duration.

So, X = A+B+C+D, Here A, B, C, D are independent normal variables, Therefore the Co‐Variance
between the normal variables is equal to zero.
E[X] = E[A]+E[B]+E[C]+E[D] = 50+75+25+100 = 250
Var[X] = Var[A]+ Var[B]+ Var[C]+ Var[D] = 25+16+9+64 = 114
X~N(μ = 250, σ2 = 114)

b.

𝑊𝑒 ℎ𝑎𝑣𝑒 𝑡𝑜 𝑓𝑖𝑛𝑑 𝑃(𝑋 ≤ 262) 𝑤ℎ𝑒𝑟𝑒 𝑋 ~ N (𝜇 =250, 𝜎 =10.677)

𝑋− 𝜇 262 − 250
∴ 𝑃( ≤ ) = 𝑃(Ƶ ≤ 1.1239) = 0.8694
𝜎 10.677
where Z follows N(0,1).

c.
G = Gain from the project, 50,000 if completed before 262 days, ‐75000 if we complete on or after
262 days
Expected Gain = E[G]
∴ 𝐸(𝐺) = 50,000 ∗ 𝑃(X < 262) + (−75,000) ∗ 𝑃(X ≥ 262)
= 50,000 ∗ 𝑃(X < 262) − 75,000 ∗ (1 − 𝑃(X ≤ 262))
= 50,000 * 0.8694 ‐75,000 * (1‐ 0.8694)
= 33,684.11

d.
Option 1:
For an investment of Rs.5,000 the variance of stage 1 can be reduced to 16 from 25 and the
variance of stage 4 can be reduced to 25 from 64. All other numbers remain the same.

Now
E[X] = E[A]+E[B]+E[C]+E[D]
E(X) = 50+75+25+100 = 250
Var[X] = Var[A]+ Var[B]+ Var[C]+ Var[D]
Var[X] = 16+16+9+25 = 66

Project Completion Time X ~ N (μ = 250, σ2 = 66)

262 − 250
∴ 𝑃(𝑋 ≤ 262) = 𝑃 𝑍 ≤ = 𝑃(1.4770) = 0.93017
√66

G = Gain from the project, 50,000 if completed before 262 days, ‐75000 if we complete on or
after 262 days
Expected Gain = E[G]
E(G) = 50,000*(0.93017) ‐75,000*(0.0698) ‐ 5,000 = 36271.91

Option 2:
For an investment of Rs. 10,000 the average of Stage 2 can be reduced to 50 from 75 and
the average of Stage 4 can be reduced from 100 to 75 . All other numbers remain the
same.
What would be your recommendation? Why?

Now
E[X] = E[A]+E[B]+E[C]+E[D]
E(X) = 50+50+25+75 = 200;
Var[X] = Var[A]+ Var[B]+ Var[C]+ Var[D] = 25+16+9+64 = 114
Project Completion Time X ~ N (μ = 200, σ2 = 114)
262 − 200
∴ 𝑃(𝑋 ≤ 262) = 𝑃 𝑍 ≤ = 𝑃(5.81) ≅ 1
√114
E(G) = 50,000*(1) ‐75,000*(0) ‐ 10,000 = 40,000
If you compare Expected gain from option 1 and option 2, Option 2 has higher gains also your
mean completion time for the project get reduced to 50 days, so go for option 2.

You need to consider Vipul’s investment, in the first case it is Rs. 5000 and in the second it is Rs.
10000. Then I think option 1 is better.
Question 1
a) Let X= Amount of Money taken away by any given participant
Then possible values of X are 0, 1 and 6 Lakhs.
P(X=1 ) = 0.4*0.2 = 0.08
P(X= 6 ) = 0.2*0.6*0.05 = 0.006
P(X=0) = 1‐ P(X=1)‐ P(X= 6 ) = 1‐0.08‐0.006= 0.914

For next two parts, let X1, X2, X3 denote the amount taken away by first, second and third participants
respectively.
X1, X2, X3 are independent and each of them has the same p.m.f as obtained in part (a).

b) We need to find probability the third participant wins 6 Lakh for the first time, given that the
first two have not taken away any money. In terms of X1, X2, X3 we would need to find

𝑃(𝑋1 ≠ 6, 𝑋2 ≠ 6, 𝑋3 = 6 | 𝑋1 = 0, 𝑋2 = 0)
𝑃 (𝑋1 ≠ 6, 𝑋2 ≠ 6, 𝑋3 = 6) ∩ (𝑋1 = 0, 𝑋2 = 0)
=
𝑃(𝑋1 = 0, 𝑋2 = 0)
𝑃(𝑋1 = 0, 𝑋2 = 0, 𝑋3 = 6) 𝑃(𝑋1 = 0)𝑃(𝑋2 = 0)𝑃(𝑋3 = 6)
= =
𝑃(𝑋1 = 0, 𝑋2 = 0) 𝑃(𝑋1 = 0) 𝑃(𝑋2 = 0)
= 𝑃(𝑋3 = 6) = 0.006

c) We need to find probability the third participant wins 6 Lakh for the first time, given that the
first two have taken away at least 1 lakh.

𝑃(𝑋1 ≠ 6, 𝑋2 ≠ 6, 𝑋3 = 6 | 𝑋1 ≥ 1, 𝑋2 ≥ 1)
𝑃 (𝑋1 ≠ 6, 𝑋2 ≠ 6, 𝑋3 = 6 ) ∩ (𝑋1 ≥ 1, 𝑋2 ≥ 1)
=
𝑃(𝑋1 ≥ 1, 𝑋2 ≥ 1)
𝑃(𝑋1 = 1, 𝑋2 = 1, 𝑋3 = 6) 𝑃(𝑋1 = 1)𝑃(𝑋2 = 1)𝑃(𝑋3 = 6)
= =
𝑃(𝑋1 ≥ 1, 𝑋2 ≥ 1) 𝑃(𝑋1 ≥ 1) 𝑃(𝑋2 ≥ 1)
. 08 ∗ .08 ∗ .006
= = .0052
. 086 ∗ .086

Question2
P(visitor buying any beverage)= 0.60 ,

P(visitor not buying) = 1‐.6 =.4

P(buying hot beverage) = P(buying hot beverage)| buy)*P(buy) = 0.4 * .6 =0.24

P(buying cold beverage) = P(buying cold beverage)| buy)* P(buy) = 0.6 * .6 =0.36

P(Capuccino)= 3x then P(Americano)=x ,

4x= P(buy hot beverage)=0.24

So, P(buying Capuccino)= .18, P(Americano)= .06

P(buying iced tea)=y, then P(buying Lemonade)=y , 2y = P(cold beverage)= .36

So, P(buying iced tea)=.18 = P(buying Lemonade)

Number of visitors= n =25

(a) Distribution of Z : Z ~ Bin (n=25,p=.60)

!
(b) 𝑃(𝑋 = 4, 𝑋 = 4, 𝑋 = 5, 𝑋 = 7, 𝑋 = 5) = . 18 ∗ . 06 ∗ . 18 ∗. 18 ∗. 4
! ! ! ! !
(c) X1 ~ Bin (n=25,p=.18)
(d) Y ~ Bin (n=25,p=.36)
(e) Expected revenue : 25* [(0.18*100)+ (0.06*125)+ (0.18*75) + (0.18*50)] = 1200
Practice Problems: Discrete Distributions and Joint Distributions ‐ Solutions

Solution 1

Let X= Number of calls received from acquaintances on any given day

Let Y= Number of calls received from strangers on any given day

Known Facts: (X+Y) ~𝑃𝑜𝑖𝑠𝑠𝑜𝑛(𝑚𝑒𝑎𝑛 = 8). Arrivals are independent and ratio of acquaintances to
strangers is 3:1.

X ~ Poisson(), Y ~ Poisson() and X and Y are independent.

Where 𝜇 = ∗ 8 = 6 and  = ∗8=2

a. What is the probability that the number of calls in a day is exactly 5?

𝟖
𝒆 ∗ 𝟖𝟓
𝑷(𝑿 + 𝒀 = 𝟓) = = 𝟎. 𝟎𝟗𝟐
𝟓!

b. What is the expected number of calls from strangers on any given day?

𝐄(𝐘) = 𝛌 = 𝐌𝐞𝐚𝐧 = 𝟐

c. Given that there were 5 calls on a day, what is the chance that 4 of them were from strangers?

Note the probability distribution of X given X+Y=n is Binomial with parameter n=5 and

𝑝= = =

So, 𝑃(𝑌 = 4 |𝑋 + 𝑌 = 5) = ∗ ∗ = 𝟎. 𝟎𝟏𝟓

d. What is the probability that on a given day, he receives 2 calls from strangers and 3 calls from
acquaintances?
𝟔
𝒆 ∗ 𝟔𝟑 𝒆 𝟐 ∗ 𝟐𝟐
𝑷(𝑿 = 𝟑, 𝒀 = 𝟐) = 𝑷(𝑿 = 𝟑) ∗ 𝑷(𝒀 = 𝟐) = ( ∗ ) = 𝟎. 𝟎𝟐𝟒
𝟑! 𝟐!

e. What is the probability that on a given day all calls he receives are from strangers?
 𝑷(𝑿 = 𝟎, 𝒀 = 𝟏) + 𝑷(𝑿 = 𝟎, 𝒀 = 𝟐) + ⋯

= (𝑷(𝑿 = 𝟎, 𝒀 = 𝟎) + 𝑷(𝑿 = 𝟎, 𝒀 = 𝟏) + 𝑷(𝑿 = 𝟎, 𝒀 = 𝟐) + ⋯ ) − 𝑷(𝑿 = 𝟎, 𝒀 = 𝟎)

= 𝑷(𝑿 = 𝟎) − 𝑷(𝑿 = 𝟎, 𝒀 = 𝟎)

𝟔
𝒆 ∗ 𝟔𝟎 𝒆 𝟔 ∗ 𝟔𝟎 𝒆 𝟐 ∗ 𝟐𝟎
= 𝑷(𝑿 = 𝟎) − 𝑷(𝑿 = 𝟎) ∗ 𝑷(𝒀 = 𝟎) = ( )−( ∗ ) = 𝟎. 𝟎𝟎𝟐
𝟎! 𝟎! 𝟎!

f. Suppose that on one particular day he decides to pick up at most the first 5 calls that he may
receive. If he receives less than or equal to 5 calls, he will pick up all of them. If he receives
more than 5 calls, he will only pick up the first 5 calls and does not pick up the rest. What is
the probability that on this day the number of calls he picks up from strangers is equal to the
number of calls he picks up from acquaintances?

= 𝑷(𝑿 = 𝟎, 𝒀 = 𝟎) + 𝑷(𝑿 = 𝟏, 𝒀 = 𝟏) + 𝑷(𝑿 = 𝟐, 𝒀 = 𝟐)

= 𝑷(𝑿 = 𝟎) ∗ 𝑷(𝒀 = 𝟎) + 𝑷(𝑿 = 𝟏) ∗ 𝑷(𝒀 = 𝟏) + 𝑷(𝑿 = 𝟐) ∗ 𝑷(𝒀 = 𝟐)

𝒆 𝟔 ∗𝟔𝟎 𝒆 𝟐 ∗𝟐𝟎 𝒆 𝟔 ∗𝟔𝟏 𝒆 𝟐 ∗𝟐𝟏 𝒆 𝟔 ∗𝟔𝟐 𝒆 𝟐 ∗𝟐𝟐

= ∗ + ∗ + ∗
𝟎! 𝟎! 𝟏! 𝟏! 𝟐! 𝟐!

= (𝟎. 𝟎𝟎𝟐) ∗ (𝟎. 𝟏𝟑𝟓) + (𝟎. 𝟎𝟏𝟓) ∗ (𝟎. 𝟐𝟕𝟏) + (𝟎. 𝟎𝟒𝟓) ∗ (𝟎. 𝟐𝟕𝟏) = 0.016
Solution to Question 2

X = No of students who pass Level 1

X ~Binomial (n = 3, p = 0.3)

3
∴ 𝑃(𝑋 = 𝑥) = ∗ (0.3) ∗ (0.7)
𝑥

x = {0, 1, 2, 3}

Y = No of students who pass Level 2

Y| X = x ~Binomial (n = x, p = 0.1)

a. Probability distribution of X:

X=x Probability Calculation Probability

0 3 0.343
𝑃(𝑋 = 0) = ∗ (0.3) ∗ (0.7)
0

1 3 0.441
𝑃(𝑋 = 1) = ∗ (0.3) ∗ (0.7)
1

2 3 0.189
𝑃(𝑋 = 2) = ∗ (0.3) ∗ (0.7)
2

3 3 0.027
𝑃(𝑋 = 3) = ∗ (0.3) ∗ (0.7)
3

b. Find the joint distribution of X and Y.

For this Joint Distribution

𝑃(𝑌 = 𝑦, 𝑋 = 𝑥) = 𝑃(𝑌 = 𝑦|𝑋 = 𝑥)𝑃(𝑋 = 𝑥)

𝑥 3
= ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7)
𝑦 𝑥
 Where (y <= x) and x = {0, 1, 2, 3}
When y > x, 𝑃(𝑌 = 𝑦, 𝑋 = 𝑥) = 0

Therefore,
𝑃(𝑌 = 1, 𝑋 = 0) = 𝑃(𝑌 = 2, 𝑋 = 0) = 𝑃(𝑌 = 3, 𝑋 = 0) = 𝑃(𝑌 = 2, 𝑋 = 1)
= 𝑃(𝑌 = 3, 𝑋 = 1) = 𝑃(𝑌 = 3, 𝑋 = 2) = 0

0 3
𝑃(𝑌 = 0, 𝑋 = 0) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.343
0 0
1 3
𝑃(𝑌 = 0, 𝑋 = 1) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.3969
0 1
2 3
𝑃(𝑌 = 0, 𝑋 = 2) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.15309
0 2
3 3
𝑃(𝑌 = 0, 𝑋 = 3) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.019683
0 3
1 3
𝑃(𝑌 = 1, 𝑋 = 1) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.0441
1 1
2 3
𝑃(𝑌 = 1, 𝑋 = 2) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.03402
1 2
3 3
𝑃(𝑌 = 1, 𝑋 = 3) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.006561
1 3
2 3
𝑃(𝑌 = 2, 𝑋 = 2) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.00189
2 2
3 3
𝑃(𝑌 = 2, 𝑋 = 3) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.000729
2 3
3 3
𝑃(𝑌 = 3, 𝑋 = 3) = ∗ (0.1) ∗ (0.9) ∗ ∗ (0.3) ∗ (0.7) = 0.000027
3 3

Joint distribution table:

P(x, y) X=0 X=1 X=2 X=3
Y=0 0.343 0.3969 0.15309 0.019683
Y=1 0 0.0441 0.03402 0.006561
Y=2 0 0 0.0081 0.000729
Y=3 0 0 0 0.000027

c. Hence find the marginal distribution of Y.

Marginal distribution of Y:
P(y=x) = ∑ 𝑃(𝑌 = 𝑦, 𝑋 = 𝑥)

Marginal
p(x, y) X=0 X=1 X=2 X=3 Probability of
Y
Y=0 0.343 0.3969 0.15309 0.019683 0.912673
Y=1 0 0.0441 0.03402 0.006561 0.084681
Y=2 0 0 0.0081 0.000729 0.002619
Y=3 0 0 0 0.000027 0.000027
Total ‐ ‐ ‐ ‐ 1
Solution 3:

P(X + Y > 0) = 1 ‐ P(X + Y = 0)

= 1 ‐ P(X = 0, Y = 0)
= 1 ‐ P(X=0)*P(Y=0) {Both are independent}
= 1 ‐ [(0.5) ^5 * (0.8) ^5]
= 1 ‐ [0.01024]
= 0.98976

Solution 4:

Q4 (a)

P (H) = , P (H) = Probability that head comes up in a toss.

P (T) = (1‐ 𝑝), P (T) = Probability that tail comes up in to toss.
Sample Space = {𝐻𝐻𝐻, 𝐻𝐻𝑇, 𝐻𝑇𝐻, 𝐻𝑇𝑇, 𝑇𝐻𝐻, 𝑇𝐻𝑇, 𝑇𝑇𝐻, 𝑇𝑇𝑇}
It is given that tosses are independent. Hence, the probabilities for each outcome are as below,

Out Comes Probability

P(HHH) 𝑝
P(HTH) 𝑝 (1‐ 𝑝)
P(HHT) 𝑝 (1‐ 𝑝)
P(THH) 𝑝 (1‐ 𝑝)
P(HTT) 𝑝 (1 − 𝑝)
P(THT) 𝑝 (1 − 𝑝)
P(TTH) 𝑝 (1 − 𝑝)
P(TTT) (1 − 𝑝)

Q4 (b)

We defined the following random variables as

X = Number of heads minus number of tails.
Y = Minimum (Number of heads, number of tails).

Out Comes No of No of X Y Probability

Heads Tails
P(HHH) 3 0 3 0 𝑝
P(HTH) 2 1 1 1 𝑝 (1‐ 𝑝)
P(HHT) 2 1 1 1 𝑝 (1‐ 𝑝)
P(THH) 2 1 1 1 𝑝 (1‐ 𝑝)
P(HTT) 1 2 ‐1 1 𝑝 (1 − 𝑝)
P(THT) 1 2 ‐1 1 𝑝 (1 − 𝑝)
P(TTH) 1 2 ‐1 1 𝑝 (1 − 𝑝)
P(TTT) 0 3 ‐3 0 (1 − 𝑝)
Q4 (c)

Based on answer to 1b, X can take values in {−3, −1,1,3 } and Y can take values in {0,1}
Joint distribution of (X, Y) is given by specifying P(X=k, Y=r) where k can be any value in
{−3, −1,1,3 } and r can be any value in {0,1} . Now,
P(X=‐3, Y=0) = P (TTT) = (1 − 𝑝)
P(X=‐3, Y=1) = 0
P(X=‐1, Y=0) = 0
P(X=‐1, Y=1) = P (HTT) +P (THT) +P (TTH) = 3𝑝(1 − 𝑝)
P(X=1, Y=0) = 0
P(X=1, Y=1) = P (HTH) +P (HHT) +P (THH) = 3𝑝 (1‐ 𝑝)
P(X=3, Y=0) = P (HHH) = 𝑝
P(X=3, Y=1) = 0

The joint distribution of X & Y can be summarized as in the table below.

X=k

‐3 ‐1 1 3
Y=r 0 (1 − 𝑝) 0 0 𝑝
1 0 3𝑝(1 − 𝑝) 3𝑝 (1‐ 𝑝) 0

Q4 (d)

Let marginal distribution of X is,

X=k P(X=k)
‐3 (1 − 𝑝)
‐1 3𝑝(1 − 𝑝)
1 3𝑝 (1‐ 𝑝)
3 𝑝

Marginal distribution of Y is,

Y=r P(Y=r)
0 (1 − 𝑝) + 𝑝
1 3𝑝(1 − 𝑝) + 3𝑝 (1 − 𝑝)

Q4 (e)

Cov (X, Y) = 𝐸 𝑋 − 𝐸(𝑋) (𝑌 − 𝐸(𝑌)

= E (XY) – E(X) E(Y)…….. (1)

For p = 0.5, the joint distribution (obtained in 1c) becomes:

X
‐3 ‐1 1 3
Y 0 0.125 0 0 0.125
1 0 0.375 0.375 0
So now,

E (X) = (using part d) = (‐3) *0.125 + (‐1)*0.375 + (1)*0.375 +3*0.125 =0

This also implies E(X)*E(Y) =0
To compute E (XY), the Distribution of XY is as follows.
XY takes value 0 when Y=0, hence has probability =.125+.125= .250
XY takes value ‐3 when X=‐3, Y=1, probability =0
XY takes value ‐1 when X=‐1, Y=1, probability =.375
XY takes value 1 when X=1, Y=1, probability =.375
XY takes value ‐3 when X=3, Y=1, probability =0
Hence E (XY) = 0*.250 + (‐3)*0 + (‐1)*.375 +1*.375 + 3* 0 = 0
Cov (X, Y) = E (XY) – E(X) E(Y) = 0

Q4 (f)

Cov (X, Y) = 0 does not imply independence

If X, Y are independent, then P(X=k, Y =r) = P(X=k)*P(Y=r) must hold for all values of k and r.
Note that P(X=‐3, Y=1) = 0, but P(X=‐3) = 0.125 and P(Y = 1) = 0.75
So, P(X=‐3, Y=) ≠ P(X=‐3)* P(Y = 1). So, X & Y are not independent.
Solution 5

S = {1,2,3,4,5,6}
Let p = Probability of occurrence of 1 in a throw. Then it is given that probability of occurrence of
2,3,4,5,6 are respectively 2p,3p, 4p,5p,6p.

Now,

𝑃(𝑋 = 𝐾) = 1

p+2p+3p+4p+5p+6p = 1

21p = 1

𝟏
p=
𝟐𝟏

Q5 (a)

𝑋 = Value of face that comes up in jth throw of die.

𝑿𝒋 = k 𝑷(𝑿𝒋 = k)
1 1
21
2 2
21
3 3
21
4 4
21
5 5
21
6 6
21

Q5 (b)

E 𝑋 =∑ 𝑋 𝑃(𝑋 = 𝑘)

= 1* + 2* + 3* + 4* + 5* +6*

E 𝐗 𝐣 = 4.33
Now,
Variance 𝑿𝒋 =E(𝑿𝒋 𝟐 ) –(𝑬 𝑿𝒋 )𝟐

(𝑿𝒋 𝟐 = 𝒌) 𝑷(𝑿𝒋 𝟐 = 𝒌)
1 1
21

4 2
21
9 3
21
16 4
21
25 5
21
36 6
21

E(𝑿𝒋 𝟐) = 1* + 4* + 9* + 16* + 25* + 36*.

E(𝑿𝒋 𝟐 ) = 21

So, Now Variance 𝑿𝒋 = E(𝑿𝒋 𝟐 ) –(𝑬 𝑿𝒋 )𝟐

= 21‐ (4.33)
= 21‐ 18.74
Variance 𝑿𝒋 = 2.251

Q5 (c)

X = 𝑋 + 𝑋 + …+ 𝑋 = Sum of outcomes from 10 throw of the die

E(X) = E (𝑋 ) + E (𝑋 ) + …+ E (𝑋 )

We know…E (𝑋 ) = for j = 1, 2… 10

So,
E(X) = 10* E (𝑋 )
= 10 *
=
= 43.33
All the throws are independent.
So, Cov (𝑋 , 𝑋 ) = 0 where i≠j
Since all the covariance terms become zero.
Var (X) = Var (𝑋 ) + Var (𝑋 ) + . . . + Var (𝑋 )
Var (𝑋 ) = 2.237 When j = 1, 2,…, 10
Var (X) =10 Var (𝑋 )
= 10 * 2.251
= 22.51
Q5 (d)

For X = 10

Each throw can take a minimum value of 1. Hence the event {X=1} is same as {𝑋 =1, 𝑋 =1,…, 𝑋 =1}

Further, since tosses are independent, P (X=10) = P (𝑋 =1) * P (𝑋 =1) * …..* P (𝑋 =1)

= * *….* (10 times)

=( )

Solution 6

P (Qualified in the 4th attempt) = Fails in attempt 1, 2, 3 and then qualifies in 4th attempt

Let X = Number of failures before qualifying

P(X=k) = (1‐p) k‐1 * p; k=0, 1, 2, 3, 4,……

If X= 4, He qualifies in 4th attempt

a)

P(X=4) = P(X=4│Self Study) * P (Self Study) + P(X=4│Coaching Class) * P (Coaching Class)

+ P(X=4│Personalized Training) * P (Personalized Training)

P(X=4│Self Study) = (0.6)3 * (0.4) = 0.0864

P(X=4│Coaching Class) = (0.3)3 * (0.7) = 0.0189

P(X=4│Personalized Training) = (0.2)3 * (0.8) = 0.0064

𝑃(𝑋 = 4) = (0.0864 ∗ 0.7) ∗ (0.0189 ∗ 0.2) ∗ (0.0064 ∗ 0.1)

P(𝑿 = 𝟒) = 𝟎. 𝟎𝟔𝟒𝟗
 X = 4 Self Study ∗ ( )
b. P(Self study|X = 4) = ( )

. ∗ .
=
.

= 0.93189

Answer 7:

X takes values 0,500,1000,1500,2000 with probabilities .28, .27, .315, .09, .045 respectively.)

Answer 8:

0.9987

Answer 9:

Let Y= number of genuine claims in a year. By property of poisson, number of genuine claims
and number of non‐genuine claims will both be poisson and independent. In particular, Y
follows Poi(100* p). So, answer is 0.1251)

Answer 10:

Hint: Use Binomial distribution. a) .0565, b) approx. 285

Answer 11:

a) (N+1)/2N b. 1/N

(Hint: Note that P (X1>X2) = P (X2>X1) by symmetry and note that P (X1=X2) +
P (X1>X2) + P (X2>X1) =1)
 Self test problems joint and continuous distributions ‐ solutions

!
1. × ×
!

2. a. 2/3, b. 1/3

3. p = probability of rain over 50 inches in a year = 𝑃(𝑧 > )

√
Assuming rainfall is independent across years.
P(waiting ≥10 years) = (1‐p)9

4. 2
5. Hint: (P(X<0)) =P (Z<μ/σ) = 0.2, P(X>5) =P (Z> (5‐𝜇)/σ)=0.1,
where Z~𝑁(0,1)
Solve for µ, σ

6. a.1/e b. 1/e

7. P (Z > 10)/ 2 + P (Z > 5/√2)/8) where Z ~ N(0,1). This is ≅ 0

8. a. 0.8413, b. 733 c. N(mean=525, variance=11025)

9. a. 0.25, b. 𝑒

10. exp(λ/c)

11. a. 0.0786 , b. 58.75%, c.1.0032 (hint: use property of normal distribution that
sym‐ metric interval around the mean has maximum probability among intervals of
given length)