Asked by Susan
1. Assume that q and z are two random variables that are perfectly positively correlated. q takes the value of 20 with probability 0.5 and the value of zero with probability 0.5, while z takes the value of 10 with probability 0.5 and the value of zero with probability 0.5. What is the covariance of q and z?
(A) 50.
(B) 100.
(C) 0.
(D) 1.
(E) There is not enough information to tell.
(A) 50.
(B) 100.
(C) 0.
(D) 1.
(E) There is not enough information to tell.
Answers
Answered by
economyst
You state that q and z are perfectly positively correlated. This alone says the covariance of q and z is 1. The rest of the information you provide is a red herring.
Answered by
Susan in response to economyst
Thank you for responding. The solution, however, is shown as 100. Wouldn't the coorelation coefficient be 1 but not necessarily the covariance?