Random Variables and Probability Distributions in Business Statistics

By Alan Anderson

Part of Business Statistics For Dummies Cheat Sheet

Random variables and probability distributions are two of the most important concepts in statistics. A random variable assigns unique numerical values to the outcomes of a random experiment; this is a process that generates uncertain outcomes. A probability distribution assigns probabilities to each possible value of a random variable.

The two basic types of probability distributions are discrete and continuous. A discrete probability distribution can only assume a finite number of different values.

Examples of discrete distributions include:

  • Binomial

  • Geometric

  • Poisson

A continuous probability distribution can assume an infinite number of different values. Examples of continuous distributions include:

  • Uniform

  • Normal

  • Student’s t

  • Chi-square

  • F