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Excel For Discrete Prob. Distributions

This document provides instructions for using Excel to calculate key metrics of a discrete probability distribution, including the expected value (E(x)), variance, and standard deviation. It describes setting up the spreadsheet with titles and labels, entering sample data and probabilities, and using Excel formulas like SUMPRODUCT, SQRT, and BINOM.DIST to calculate the mean, variance, standard deviation, and binomial probabilities for examples involving Florida mortgages and Poisson distributions.

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0% found this document useful (0 votes)
68 views9 pages

Excel For Discrete Prob. Distributions

This document provides instructions for using Excel to calculate key metrics of a discrete probability distribution, including the expected value (E(x)), variance, and standard deviation. It describes setting up the spreadsheet with titles and labels, entering sample data and probabilities, and using Excel formulas like SUMPRODUCT, SQRT, and BINOM.DIST to calculate the mean, variance, standard deviation, and binomial probabilities for examples involving Florida mortgages and Poisson distributions.

Uploaded by

Suga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Using Excel to Calculate E(x) Variance and Stand. Dev.

Of Discrete
Probability Distribution


1. Titles:

At A3: x

At B3: P(x)

At C3: Sq Deviation from Mean

At A10: Mean =

At A 12: Variance =

At A 14: Standard Deviation =
Using Excel to Calculate E(x) Variance and Stand. Dev. Of Discrete
Probability Distribution


Data Entry and Calculations:

2. Enter from A4 - A8 x variable 0,1,2,3,4
• From B4 –B8 Probabilities 0.4,0.25,0.2,0.05,0.1

3. At B 10 enter equation: =sumproduct(highlight


A4 to A8, then highlight B4 to B8) enter
4. At C4 enter equation: =(highlight A4 - $B$10)^(found above 6)
2……. Then copy this down the column to C8
Using Excel to Calculate E(x) Variance and Stand. Dev. Of Discrete
Probability Distribution


Calculations:

5. At B12 enter =sumproduct(highlight C4 to C8, then highlight B4 to
B8) enter

6. At B14, enter equation =SQRT(B12)
Using Excel to Calculate Binomial Probabilities (1 of 2)
Excel’s BINOM.DIST function can be used to find
binomial probabilities
The BINOM.DIST function has the following form:

where:

x = Number of successes
n = Number of trials
p = Probability of a success
cumulative = False, if you want to determine the probability
of exactly x successes occurring
cumulative = True, if you want to determine the probability
of x or fewer successes occurring
Calculating Binomial Probabilities
Example: According to First American CoreLogic, 45% of
the mortgages in Florida were underwater during the housing collapse.
I. If we randomly select three Florida mortgages, what is the probability that exactly two of them are
underwater?
II. What is the probability of two or fewer mortgages from our sample being underwater?

Instructions:
III. Titles: At A3: n At B3: p At C3: Mean At D3: Variance At E3: Std Deviation
At A6:x At B6: P(x) At C6: Cumulative P(x)
IV. Enter Data: At A4: 3 At B4 0.45 At A7 to A10: 0 to 3
V. Enter Equations: At C4: =A4*B4 At D4: =A4*B4*(1-B4) At E4: =sqrt(D4)
VI. Enter Functions: At B7: = BINOM.DIST(A7,$A$4,$B$4,FALSE)
VII. Then, under the Cumulative P(x) column:
VIII. At C7: = BINOM.DIST(A7,$A$4,$B$4,TRUE)
Using Excel to Calculate Binomial Probabilities (2 of 2)
Example: According to First American CoreLogic, 45% of
the mortgages in Florida were underwater during the housing collapse.
1. If we randomly select three Florida mortgages, what is the probability that
exactly two of them are underwater?
2. What is the probability of two or fewer mortgages from our sample being
underwater?
Using Excel to Calculate Poisson Probabilities
The Excel POISSON.DIST function has the following
form:

where:
cumulative = False, if you want to determine the probability
of exactly x occurrences

cumulative = True, if you want to determine the probability

of x or fewer occurrences
Recall the Excel Practice Test Problem: Assume that a hospital admits an average of 8 patients an hour and the distribution of arrival times
follows the Poisson distribution. 
Solve the probability that in the next hour 3 or less patients arrive at the hospital
Solve the probability that in the next 2 hours exactly 8 patients arrive at the hospital

Corrector Practice

mu= 8 16
x 3 8
Solutions 0.042380112 0.011987473
Corrector
Practice

mu= 8 16
x 3 8

Solutions =POISSON.DIST(B4,B3,TRUE) =POISSON.DIST(C4,C3,FALSE)

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