Risk theory Decision-making
under uncertainty

Description

A random variable X possesses a binomial distribution with parameters n,p, where n = 1, 2, ... and 0 < p < 1, if it has the representation

,              (1)

where Bp(i), i=1,2,...,n are independent standard Bernoulli variables with parameter p.

The following picture presents graphs of probability function (bound to the left axis) and CDF (bound to the right axis) for B 10, 0.3 Probability function and CDF

Characteristics

The following table contains formulae for calculation of characteristics of binomial distribution B n,p

Probability function ,
CDF ,
Expectation np
Variance np(1-p)

Simulation

Simulation of a binomial variable Bn,p is attained by formula (1), where standard Bernoulli variables are generated by method presented here.

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