Help with Econometrics homework

Posted on 2014-03-18 14:34:00 in Economics by K. HAMILTON

I am having some trouble with an Econometrics assignment. The question is "Let X, Y be two random variables, with the relationship Y=2X+2. What is the correlation

between X and Y? Hint: use definition: Cor(X,Y)=Cov(X,Y)/?Var(X)Var(Y)." Obviously, this is a straight line, so the correlation will be +1, but I do not understand how my professor would like me to prove this. Any input is greatly appreciated! Thanks!

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