We have the following information about the random variables X and Y: mu_X=0.5 , mu_Y=-1, sigma_X^2=1 , sigma_Y^2=2.25

Jason Farmer

Jason Farmer

Answered question

2021-09-09

We have the following information about the random variables X and Y:
μX=0.5,μY=1,σX2=1,σY2=2.25
Calculate the variance of Z=-1X+7Y,
a) when the coefficient of correlation is ρ(X,Y)=0.33
σZ2=?
b) when X and Y are independent random variables:
σZ2=?

Answer & Explanation

pattererX

pattererX

Skilled2021-09-10Added 95 answers

Step 1
It is given that , the values of σX2=1,σY2=0.225
a)
It is given that the X and Y are two random variables.
The formula for V(ax+by)=a2V(x)+b2V(y)+2abcov(x,y)
Here, Z=1X+7Yandcov(x,y)=0,33
Then the variance of Z is
V(1X+7y)=(1)2V(x)+72V(y)+2(1)(7)cov(x,y)
=V(x)+49V(y)14cov(x,y)
=1+49(2,25)14(0,33)
=1+110,254,62
=106,63
Then , the variance of Z is 106,63
Step 2
b)
It is given that the X and Y are independent random variables.
The formula for V(ax+by)=a2V(x)+b2V(y)
Here , Z=1X+7Y
Then the variance of Z is
V(1X+7y)=(1)2V(x)+72V(y)
=V(x)+49V(y)
=1+49(2,25)
=1+110,25
=111,25
Then, the variance of Z is 111,25

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