Show that r 2 defined in (3.5.5) ranges between 0 and 1. You may use the Cauchy–Schwarz inequality, which states that for any random variables X and Y the following relationship holds true: [E (XY)] 2 ≤ E(X 2 ) E(Y 2 )]

Chapter 3, Exerise Questions #5

Show that r2 defined in (3.5.5) ranges between 0 and 1. You may use the Cauchy–Schwarz inequality, which states that for any random variables X and Y the following relationship holds true:

[E (XY)]2 ≤ E(X2) E(Y2)]

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Basic Econometrics

5th edition

Authors: Damodar N. Gujrati, Dawn C. Porter

ISBN: 978-0073375779