Midterm Corrections

7 Nov

My score was 95. I got 5 points off from question #7 because I forgot to multiply the E(K1K2) by its probability, thus I also got wrong the covariance. the right way to do it is:

E(K1K2)= 0.5(1)(2) + 0.5(2)(1)= 2
Cov(K1K2)= 2 – U1U2= 2-1.5^2= -0.25
Correlation= -0.25/(sigma1*sigma2)= -0.25/(sqrt(0.25)*sqrt(0.25))= -1

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