BAN 001 Chapter Notes - Chapter 6: Binomial Distribution

• School: Hofstra University
• Department: Business Analytics
• Course: BAN 001
• Professor: John Affisco

Document Summary

Let us assume that we conduct an experiment that consists of n identical trials. The experiment has the following characteristics: each of the n trials must be statistically independent of the remaining n-1 trials, at each trial there are only two possible outcomes. Let us take a look at the simple experiment of tossing a coin n times. We define success to be getting a head on a trial. We want to calculate the probability of getting x heads in n trials. One way this could occur is as follows: We toss the coin n times, and we define event e1 as the event where the first x trials result in heads. This result is illustrated in the following figure. Recall that any trial resulting in a head is a success and therefore has a probability of p, while any trial resulting in a tail is a failure and has a probability of q. n trials.