Consider Eq. (17.13.4): To obtain the variance of Î²Ì i from the variances of aÌ i ,
Question:
To obtain the variance of βÌi from the variances of aÌi, we use the following formula:
a. Using the preceding formula, find the variance of βÌi expressed as
b. If the variances of aÌi are large relative to themselves, will the variance of βÌi be large also? Why or why not?
Transcribed Image Text:
B; = ao + aji + azi² + . ..+ ami™ var (B) : = var (âo + âji + âzi² + · ..+ âmi™) -Σ Ei var (â;) +2iU+p)cov (â¡âp) -Σο J
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