Variance of sum and product refers to how the variability of random variables combines when adding or multiplying independent random variables. When dealing with independent random variables, the variance of their sum is equal to the sum of their variances, while the variance of their product is determined using a specific formula that involves the means and variances of the individual variables. Understanding these properties is essential for predicting how the combined uncertainty behaves in various applications, such as risk assessment or statistical modeling.
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