CMA Foundation · Fundamentals of Business Mathematics and Statistics · Probability
If E(X) = 8 for a random variable X, what is E(3X - 5)?
E(3X - 5) equals 19. Expectation is linear, so it equals 3 times E(X) minus 5, which is 24 minus 5. Forgetting the constant gives 24, and using the wrong sign gives 29.
- A19Correct
- B24
- C29
- D13
Explanation
E(aX + b) = aE(X) + b = 3(8) - 5 = 24 - 5 = 19. The option 24 forgets to subtract 5, and 29 adds 5 instead of subtracting it.
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