In the solution to this question, var(S) has been computed to 30 but if I am using the formula from core reading, I am getting 50, i.e., 10 x 2 + 10 x 3 as E(N) is 10 and var(X) is 2. What am I missing here? Pls help
Looks like you are using E(X^2), where it should be [E(X)]^2. Actual answer is... Var(S)=E(N)*Var(X)+Var(N)*[E(X)]^2 =10*2+10*1^2=30
I have amended the title of this post to refer to the 2019 Course Materials as it looks like you were referring to an old version. Don't forget for a compound Poisson you also have the formulae on page 16 of the Tables. Hence Var (S) = 10 E(X^2)=10 (var(S)+(EX)^2)=10(2+1)=30.