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Unformatted text preview: conditional PDFs of S. (That is, there will be two PDFs, one for P(S|A=10) and P(S|A=15).) c) Using b, calculate the expected values of S, conditonal on A. Compare these two expectations. Does the relative magnitudes of the expected values yield any intuition about how the two variables are related? d) Calculate the E[A], E[S], Var[A], and Var[S]. e) Next calculate the covariance of A and S. Finally, calculate the correlation coefficient. f) If Hammer selects a pair of pants at random, what is the expected price? What is the variance of the price?...
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This note was uploaded on 10/15/2011 for the course ECON 390 at Pennsylvania State University, University Park.