Joint Probability and Statistics-ECO6416

Joint Probability and Statistics-ECO6416 - Joint...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Joint Probability and Statistics A joint probability distribution of a group of random variables is the distribution of group of variables as a whole. Applied business statistics deal mostly with the joint probability distribution of two discrete random variables. The joint probability distribution of two discrete random variables is the likelihood of observing all combinations of the two variables. Joint Probability Function: Let us have two discrete random variables X and Y, taking values x i , i = 1,. ...,m, and y i , j = 1,. ....,n, respectively. The function: P X, Y = P X, Y (x, y) = P(X = x, Y = y) is called the joint probability function of the random variables X and Y. As an example, consider two competitive stocks (A, and B). Suppose the estimated rates of return of stocks A and B are given as follow (respectively): R A = [0.8, 1.0, 1.2], and R B = [0.9, 1.0, 1.1] The numbers in the body of the following table are the estimated probabilities of all possible combinations of two jointly probabilities of the two random variables R A
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Joint Probability and Statistics-ECO6416 - Joint...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online