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Let x1, x2,..., x10 be ten observations of a random variable X. If sum of (xi - lambda) = 3 and sum of (xi - lambda)² = 13, then the variance of these observations is:
- 1.35
- 1.31
- 1.21
- 1.25
Correct answer: 1.21
Solution
Shifting all observations by a constant (lambda) does not change the variance. With yi = xi - lambda: Var(X) = Var(Y) = (1/10)*sum(yi²) - [(1/10)*sum(yi)]² = 13/10 - (3/10)² = 1.3 - 0.09 = 1.21.
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