Let XXX have the Pareto distribution f(x)=αxmαxα+1f(x) = \frac{\alpha x_m^\alpha}{x^{\alpha+1}}f(x)=xα+1αxmα for x≥xmx \geq x_mx≥xm. What is the variance Var(X)Var(X)Var(X) for α>2\alpha > 2α>2?
xm2α(α−1)2(α−2)\frac{x_m^2 \alpha}{(\alpha-1)^2(\alpha-2)}(α−1)2(α−2)xm2α
xm2(α−1)2(α−2)\frac{x_m^2}{(\alpha-1)^2(\alpha-2)}(α−1)2(α−2)xm2
α(α−1)2\frac{\alpha}{(\alpha-1)^2}(α−1)2α
xm2αα−2\frac{x_m^2 \alpha}{\alpha-2}α−2xm2α