If X and Y are independent random variables with variances \(\sigma_x^2 = 5\) and \(\sigma_y^2 = 3\) then the variance of the random variable \(Z = 3X + 2Y - 5\) is
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For independent random variables, the variance of a linear combination \(Z = aX + bY + c\) is \(\operatorname{Var}(Z) = a^2\operatorname{Var}(X) + b^2\operatorname{Var}(Y)\).
Concept: For independent random variables, the variance of a linear combination \(Z = aX + bY + c\) is \(\operatorname{Var}(Z) = a^2\operatorname{Var}(X) + b^2\operatorname{Var}(Y)\). A constant added to the variable does not change the spread, so the constant term contributes nothing to the variance.
Step 1: Identify the coefficients. Here \(a = 3\), \(b = 2\), and the constant is \(-5\). The variances are \(\operatorname{Var}(X) = 5\) and \(\operatorname{Var}(Y) = 3\).
Step 2: Apply the formula and drop the constant term: \[\operatorname{Var}(Z) = 3^2(5) + 2^2(3) = 9(5) + 4(3) = 45 + 12 = 57.\]