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For five observations x1, x2, x3, x4, x5, it is given that the sum of (xi - 10) for i = 1 to 5 equals 5, and the sum of (xi - 10)² for i = 1 to 5 equals 25. Find the standard deviation of the transformed observations 2*x1 + 7, 2*x2 + 7, 2*x3 + 7, 2*x4 + 7, 2*x5 + 7.
- 8
- 16
- 4
- 2
Correct answer: 4
Solution
Let ai = xi - 10. We have sum(ai) = 5, sum(ai²) = 25. Mean of ai = 5/5 = 1. Variance of ai = (25/5) - 1² = 5 - 1 = 4, so SD(xi) = 2. The new observations yi = 2*xi + 7 are a linear transformation. SD(yi) = |2| * SD(xi) = 2 * 2 = 4.
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