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Unformatted text preview: two flips and it shows tails. Now what is the probability that it is the fair coin? (30) 2. Suppose that an automobile dealer pays an amount X 1 (in thousands of dollars) for a used car and then sells it for an amount X 2 (in thousands of dollars). Further suppose X 1 and X 2 have joint density and zero otherwise. Determine the dealers expected gain from the sale. 2 3. Let E**(Y * X) = X N $ ** be the best proportional predictor of Y given X, where $ ** is the constrained estimate of b in Theorem 2.7.7 which minimizes E( g 2 ) subject to a = 0. (10) (a) Show: $ ** = [E(XX N )]1 E(XY). (10) (b) Let g ** / Y  X N $ **. Find E( g **). (10) (c) Find Cov(X, g **). (10) (d) Find E[( g **) 2 ]....
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This note was uploaded on 12/12/2010 for the course ECON ECON 220A taught by Professor Dalej.poirier during the Fall '10 term at UC Irvine.
 Fall '10
 DaleJ.POIRIER
 Econometrics

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