5-25E

a.

The given data is tabulated in a Bivariate distribution for random variable x and y. It is
required to find the expected value and variance for x and y.

The expected value for x and y are as follows:

E ( x)  0.2  50   0.5  30   0.3  40 

= 37
E ( y )  0.2  80   0.5  50   0.3  60 
= 59

Therefore, the required answers are 37 and 59 respectively.

The variance for x and y are as follows:

Var ( x)  0.2  50  37   0.5  30  37   0.3  40  37 

2 2 2

= 61
Var ( y )  0.2  80  59   0.5  50  59   0.3  60  59 
2 2 2

= 129

Therefore, the required answers are 61 and 129 respectively.

b.

Define s  x  y . The probability distribution for x  y is as follows:

s f (s)
80 0.2581
90 0.5806
100 0.6452
110 0.7097
120 0.3871
130 0.4194
Table 5-25E probability distribution for x  y .

Table 5-25E probability distribution for x  y . See that f ( s  80)  30 / 310  50 / 310 .
The rest of the calculations are done accordingly.

c.

Use Excel formula =Sum to calculate the expected value and variance of x  y . The
following screen shot in Excel shows the expected value, E  x  y  and variance,
V  x  y .

Figure 5c-25E expected value and variance of x  y .

Figure 5c-25E shows the expected value and variance in highlighted cells.

Therefore, the required answers are 316.463 and 134215.0153 respectively.

d.

The formula for computing covariance for random variables x and y is given as follows:

 xy  Var  x  y   Var  x   Var ( y )  / 2 (1)

Where, Var  x  y  is variance of x  y , Var  x  is variance of x, and Var ( y ) is variance

of y.

From information,

Var  x  y   134215.0153,Var ( x)  61,Var ( y)  129

Substitute the values in equation (1) and obtain the required covariance. Therefore, the
covariance is as follows:
  xy  134215.0153  61  129 / 2
= 67012.50765

Therefore, the required answers is: 67012.51 . The positive sign of the value indicate that
variables x and y are positively related.

e.

The variance of sum of x  y is bigger than sum of individual variances.