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Random Variable

What is a 'Random Variable'

A random variable is a variable whose value is unknown or a function that assigns values to each of an experiment's outcomes. Random variables are often designated by letters and can be classified as discrete, which are variables that have specific values, or continuous, which are variables that can have any values within a continuous range.

Explaining 'Random Variable'

Consider an experiment where a coin is tossed three times. If X represents the number of times that the coin comes up heads, then X is a discrete random variable that can only have the values 0,1,2,3 (from no heads in three successive coin tosses, to all heads). No other value is possible for X.


An example of a continuous random variable would be an experiment that involves measuring the amount of rainfall in a city over a year, or the average height of a random group of 25 people.





Further Reading


The covariance sign of transformed random variables with applications to economics and finance
academic.oup.com [PDF]
A number of problems in economics, finance and insurance rely on determining the sign of the covariance of two transformations of a random variable. The classical Chebyshev's inequality offers a powerful tool for solving the problem, but it assumes that the …

The application of continuous-time random walks in finance and economicsThe application of continuous-time random walks in finance and economics
www.sciencedirect.com [PDF]
A number of problems in economics, finance and insurance rely on determining the sign of the covariance of two transformations of a random variable. The classical Chebyshev's inequality offers a powerful tool for solving the problem, but it assumes that the …

Coherent and random sequences in financial fluctuationsCoherent and random sequences in financial fluctuations
www.sciencedirect.com [PDF]
A number of problems in economics, finance and insurance rely on determining the sign of the covariance of two transformations of a random variable. The classical Chebyshev's inequality offers a powerful tool for solving the problem, but it assumes that the …

Power laws in economics and financePower laws in economics and finance
www.annualreviews.org [PDF]
A number of problems in economics, finance and insurance rely on determining the sign of the covariance of two transformations of a random variable. The classical Chebyshev's inequality offers a powerful tool for solving the problem, but it assumes that the …

On simulating truncated skewed Cauchy random variablesOn simulating truncated skewed Cauchy random variables
www.tandfonline.com [PDF]
A number of problems in economics, finance and insurance rely on determining the sign of the covariance of two transformations of a random variable. The classical Chebyshev's inequality offers a powerful tool for solving the problem, but it assumes that the …

Herd behavior and aggregate fluctuations in financial marketsHerd behavior and aggregate fluctuations in financial markets
arxiv.org [PDF]
A number of problems in economics, finance and insurance rely on determining the sign of the covariance of two transformations of a random variable. The classical Chebyshev's inequality offers a powerful tool for solving the problem, but it assumes that the …

Discounting certain random sumsDiscounting certain random sums
www.tandfonline.com [PDF]
A number of problems in economics, finance and insurance rely on determining the sign of the covariance of two transformations of a random variable. The classical Chebyshev's inequality offers a powerful tool for solving the problem, but it assumes that the …

A multi-point distributed random variable accelerator for Monte Carlo simulation in financeA multi-point distributed random variable accelerator for Monte Carlo simulation in finance
ieeexplore.ieee.org [PDF]
A number of problems in economics, finance and insurance rely on determining the sign of the covariance of two transformations of a random variable. The classical Chebyshev's inequality offers a powerful tool for solving the problem, but it assumes that the …



Q&A About Random Variable


What type of experiments do continuous random variables represent?

Continuous random variables represent experiments where the results can take on any value within a range.

What is a random variable?

A random variable is a variable whose value is unknown or a function that assigns values to each of an experiment's outcomes.

What type of experiments do discrete random variables represent?

Discrete random variables represent experiments where the results can only have specific values.

How does one measure rainfall in a city over time with respect to time?

One measures rainfall in a city over time by measuring the amount of rainfall in that city at different points in time. This measurement will be used to determine how much rain fell during that period of time.

Are there discrete and continuous random variables?

Yes, there are both types of random variables.