Hello all, A couple of queries with this question: For part (ii), showing Y is normally distributed, is the (1/2) at the start of the f(y) stated in (i) ignored in this process? For part (iii): E(e^(2tX)) = Mx (2t) = e^(2ut + 2sig^2) are we just plugging 2t in to the Mx(t) for the Normal distribution? If so, what happens to the t attached to the sigma? Apologies if this seems simple to some, I would love to be enlightened!
Nah! It's just gone into the square root. Hence 2×root(2×pi×sig²) becomes: root(4×2×pi×sig²) = root(8×pi×sig²) Yes that's exactly it! However, there appears to be a horrible error in the solution where the t² has been missed off. Sorry - my fault - I'll get it fixed and put it in the corrections document on our website.
Thanks again John, much appreciated! Can't believe I missed the square root but at least my brain kicked in and picked up the error in part (iii)...
