If the covariance between two variables is 20 and the variance of one ...
Solution:
Given, Covariance between two variables = 20
Variance of one of the variables = 16
Let the two variables be X and Y.
Covariance formula is given as:
Cov(X, Y) = E[(X - μX)(Y - μY)]
where E is the expected value, μX and μY are the means of X and Y respectively.
We can rewrite the covariance formula as:
Cov(X, Y) = E[XY] - μXμY
Now, we can use this formula to find the variance of the other variable.
Variance formula is given as:
Var(Y) = E[(Y - μY)²]
We can rewrite the variance formula as:
Var(Y) = E[Y²] - μY²
Now, we can use the covariance formula and the variance formula to find Var(Y).
Var(Y) = Cov(X, Y) + μXμY (from covariance formula)
We know that Cov(X, Y) = 20 and Var(X) = 16.
Let us assume that μX = μY = μ (for simplicity).
Then, we can write:
Var(X) = E[X²] - μ² (from variance formula)
16 = E[X²] - μ²
E[X²] = 16 + μ²
Similarly, we can write:
Cov(X, Y) = E[XY] - μ² (from covariance formula)
20 = E[XY] - μ²
E[XY] = 20 + μ²
Now, we can substitute these values in the expression for Var(Y).
Var(Y) = Cov(X, Y) + μXμY
Var(Y) = 20 + μ² + μ²
Var(Y) = 2μ² + 20
We can see that Var(Y) depends on μ², which can take any positive value.
Therefore, Var(Y) can be more than 100.
Hence, option A is the correct answer.
If the covariance between two variables is 20 and the variance of one ...
Given, Cov (x, y) =20
and variance of one of the variables is 16.
so the standard deviation SD is 4.
we know the formula,
r= cov (x, y) /(SD of x * SD of Y)
r= 20 /4 * SD of the other variable
r= 5/ SD of the other variable
we also know that coefficient of correlation, r, lies between -1 and +1 including them.
so, SD of the other variable has to be atleast 5 or more.
so the variance will be 5^2 = 25 atleast or more.
i dont know why the icai book says the answer is more than 100. if anybody can match the answer with book then please tell me.
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