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Unformatted text preview: variable, so it should be treated as any specific number in the proof. From step 2 to step 3 in the proof, first distribute the expectation to each term } )] ( {[ ] ) ( 2 [ ) ( )] ( [ ) ( 2 ( 2 2 2 2 x E E x x E E x E x E x x E x E= +. As E(x) is a constant, ) ( ) ( 2 ] ) ( 2 [ x E x E x x E E = , ( a constant can be taken out of the expectation) and 2 2 )] ( [ } )] ( {[ x E x E E = (expectation of a constant is equal to the constant itself, E(x)) Answer Key to Problem Set 6 Fall 2005 Econ 3818300 3 Answer Key to Problem Set 6 Fall 2005 Econ 3818300 4 Answer Key to Problem Set 6 Fall 2005 Econ 3818300 5...
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 Fall '05
 JeffreyS.Zax
 Economics

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