I have created a custom list with column "Approved", it is a drop down box with 3 value.
1. Select 2. Yes 3. No
In the view, in "Approved" column I want to display "Pending" in the place of "Select". Please help.
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Building off of what PurpleShadow said you can go the route of a Calculated Column or a SharePoint Workflow.
I would suggest creating a Status column of type Calculated Column and then inputting the following:
=IF([Approved]=Yes, "Approved", "Pending")
This will basically display Pending in the Status column unless Approved is equal to value "Yes." This is probably the most basic implementation of what you are trying to do, unless you have Designer permissions in your environment then a Workflow would be much better.