Review of Probability and Statistics

Raymundo M. Campos-Vazquez

September 3, 2007

Contents
1 Concepts 1

2 Problems 2

1 Concepts
2
1. If Y N( ; ). Find P r(c1 Y c2 ) where c1 c2 :

Y
(a) Transform Y into a standard normal distribution: Z = 2 N (0; 1):
(b) Then Pr( c1 2 Z c2
2 )
(c) Using the properties of Z, we have that Pr( c1 2 Z c2
2 ) = Pr(Z c2
2 )
c1
Pr(Z 2 )

(d) Look in the tables for these probabilities.

2. Show that E[Y ] = E[Y ] = :

P
(a) E[Y ] = E[ i Yi =n] = n1 E[Y1 + ::: + Yn ] = n1 fE[Y1 ] + ::: + E[Yn ]g
(b) As E[Y1 ] = ::: = E[Yn ]; we have E[Y ] = E[Y ] = :

V [Y ] 2
3. Show that V [Y ] = n
= n
:Assume that Y1 ; :::; Yn are independent and have the same
variance.
P 1
(a) V [Y ] = V [ i Yi =n] = n2
V [Y1 + ::: + Yn ]
1
(b) Assuming that Y1 ; :::; Yn are independent, n2
fV [Y1 ] + ::: + V [Yn ]g
V [Y ] 2
(c) As V [Y1 ] = ::: = V [Yn ]; we have V [Y ] = n
= n

1
2 Problems
1. You decide to analyze whether or not the presidential candidate for a certain party did
better if his party controlled the house. Accordingly you collect data for presidential
elections 1860-1996. You think of this data as comprising a population which you
want to describe rather than a sample from which you want to infer behavior of a
larger population. The next table shows the joint probability of Presidential Party
A¢ liation and Party control of the House of Representatives 1860-1996.
Democ Con- Repub Con- Total
trol of HR trol of HR
(Y=0) (Y=1)
Dem Pdt 0.412 0.030 0.441
(X=0)
Rep Pdt 0.176 0.382 0.559
(X=1)
Total 0.588 0.412 1

(a) Interpret one of the joint probabilities and one of the marginal probabilities.
38.2% of the presidents were Rep and were in the WH while Rep controlled the
HR. 44.1% of all presidents were Dem.
(b) Compute E(X) and E(XjY=0). Why are they di¤erent?
0.559 and 0.701 respectively. E(X) gives you the unconditional expected value,
while E(XjY=0) is the conditional expected value.
(c) If you picked one of the Republican presidents at random, what is the probability
that during his term the Democrats had control of the HR?
29.9%.
(d) What would the joint distribution look like under independence?

2. The accompanying table gives the outcomes and probability distribution of the number
of times a student checks her e-mail daily:
# email checks 0 1 2 3 4 5 6
Pr 0.05 0.15 0.30 0.25 0.15 0.08 0.02

(a) Sketch the pdf.

(b) Calculate the cdf. Graph the cdf.

2
 (c) What is the probability of her checking her e-mail between 1 and 3 times a day?
More than 3 times a day?
0.70 and 0.25.
(d) Calculate the E(X) and Var(X).

3. Problem 2.7 in the book. Male earnings have a mean of $40,000/yr and a standard
deviation of $12,000/yr. Female earnings have a mean of $45,000/yr and a standard
deviation of $18,000. The correlation between male and female earnings for a couple
is 0.80. Let C denote the combined earnings for a randomly selected couple.

(a) Mean of C
C = M + F where M and F represent earnings from males and females. Then
E(C) = E(M ) + E(F ) = 40000 + 45000 = 850000:
(b) Cov(M,F)
Cov(M;F )
We know the correlation coe¢ cient, and as this coe¢ cient is equal to M F
,
Cov(M;F )
then 0.80= 12000 18000
. Cov(M; F ) = 172:8 millions.
(c) Std Dev of C
V ar(C) = V ar(M + F ). Note that M and F are not independent. Hence,

V ar(C) = V ar(M ) + V ar(F ) + 2Cov(M; F )

= 813:6m

Then the standard deviation is equal to 28523.67.

What is the Variance of Z = M F?

4. Problem 2.9 in the textbook.

Value of Y
14 22 30 40 65
1 0.02 0.05 0.10 0.03 0.01
X 5 0.17 0.15 0.05 0.02 0.01
8 0.02 0.03 0.15 0.10 0.09

(a) Find the Marginal Probabilities of X and Y.

P
Pr(X = 1) = i Pr(Y = yi ; X = 1) = 0:21: Pr(X = 5) = 0:40: Pr(X = 8) =
0:39:
Pr(Y = 14) = 0:21: Pr(Y = 22) = 0:23: Pr(Y = 30) = 0:30: Pr(Y = 40) = 0:15:
Pr(Y = 65) = 0:11:

3
(b) Are X and Y independent?
(c) Calculate the mean and variance of Y.
E(Y ) = 30:15; V (Y ) = 218:21
E(X) = 5:33; V (X) = 6:76
(d) Calculate the probability distribution, mean and variance of Y given X=8. Graph
the cdf.
Value of Y
14 22 30 40 65
Pr(YjX=8) 0.0513 0.077 0.384 0.256 0.231
cdf 0.0513 0.128 0.512 0.769 1
P
E(Y jX = 8) = i Yi Pr(Yi jX = 8) = 39:205
P
V (Y jX = 8) = i (Yi E(Y jX = 8))2 Pr(Yi jX = 8) = 241:65
Check also that V (Y jX = 8) = E(Y 2 jX = 8) [E(Y jX = 8)]2 :
(e) Calculate the covariance and correlation between X and Y.
P P
Cov(X; Y ) = E[(X E(X))(Y E(Y ))] = i j (Xi E(X))(Yj E(Y )) Pr(X =
Xi ; Y = Yj )
P P
Notice that Cov(X; Y ) = E(XY ) E(X)E(Y ) where E(XY ) = i j Xi Yj Pr(X =
Xi ; Y = Yj ); Cov(X; Y ) = 171:7 160:69 = 11: