Problem Set 1

B show that eya ex b and vary a2 varx c

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: y2=ax2+b, and the probability distribution is p(y1)=p1 and p(y2)=p2. b) Show that E[Y]=a E[X] +b and Var(Y) = a2 Var(X). c) Suppose that x1=0 and x2=1. Show that Var (X) ≤ E[X]. Question 2. Consider an investment opportunity that generates a profit (net of all investment costs) of either +1 dollar with probability ¾ or  1 dollar with probability ¼. a) What are the mean and the variance of the profit from the investm...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online