Chapter 6 answers - 1. Define (a) stochastic process; (b)...

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1. Define (a) stochastic process; (b) random variable; (c) discrete random variable; and (d) probability distribution. (a) A stochastic process is the counterpart to a deterministic process in probability theory. Instead of  dealing only with one possible 'reality' of how the process might evolve under time, in a stochastic  or random process there is some indeterminacy in its future evolution described by probability  distributions.  It may also be defined as a statistical process involving a number of random variables depending on  a variable parameter (usually time). (b) A random variable is a function, which assigns unique numerical values to all possible outcomes  of a random experiment under fixed conditions. (c) A random variable is which can assume only a countable number of distinct values such as 0, 1,  2, 3, . .. is called a discrete random variable. (d) Probability distribution of a discrete random variable is a list of probabilities associated with each  of its possible values. It is also called probability mass function or simply probability function. 2. Without using formulas, explain the meaning of (a) expected value of a random variable; (b) actuarial
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This note was uploaded on 05/13/2010 for the course RES 341 Res 341 taught by Professor Professor during the Winter '09 term at University of Phoenix.

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Chapter 6 answers - 1. Define (a) stochastic process; (b)...

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