. Let X and Y be random variables of possible percent returns (0%, 10%, 15%, and 20%) for stock A and, with the joint probability distribution given
in the Table below:
Joint Probability Distribution for Random Variables X and Y
Y Return
X Return 0 5 10 15
0 0.0625 0.0625 0.0625 0.0625
5 0.0625 0.0625 0.0625 0.0625
10 0.0625 0.0625 0.0625 0.0625
15 0.0625 0.0625 0.0625 0.0625
(a) Find the marginal probabilities.
(b) Determine if X and Y are independent.
(c) Find the means and variances of both X and Y.

(a) The marginal distribution of X is

Pr(X = x) = ∑ Pr(X = x, Y = y)

… = 0.0625 + 0.0625 + 0.0625 + 0.0625

… = 0.25

That is, the first equality follows from the law of total probability, with the sum taken over y from {0, 5, 10, 15}. Each probability Pr(X = x, Y = y) is given in the table to be 0.0625.

Similarly, the marginal distribution of Y is

Pr(Y = y) = 0.25

(b) Yes, they're independent because

Pr(X = x, Y = y) = 0.0625,

and

Pr(X = x) Pr(Y = y) = 0.25 • 0.25 = 0.0625.

(c) The mean of X is

E[X] = ∑ x Pr(X = x)

… = 0.25 ∑ x

… = 0.25 (0 + 5 + 10 + 15)

… = 7.5

and you would find the same mean for Y,

E[Y] = 7.5

The variance of X is

V[X] = E[X^2] - E[X]^2

… = (∑ x^2 Pr(X = x)) - 7.5^2

… = 0.25 (∑ x^2) - 56.25

… = 0.25 (0^2 + 5^2 + 10^2 + 15^2) - 56.25

… = 31.25

and similarly,

V[Y] = 31.25

(each sum is taken with x and y from {0, 5, 10, 15})

if x decreases by 4 then y increases by 10

step-by-step explanation:

c.

step-by-step explanation:

because first you have to add the 4x, 9x, and the 7x together and you get 20x and then you add the last numbers up and you get 5and then you put the subtraction sign in there and that's how you get the answer.