Given thatisthe mean and σ2is the variance of n observations x 1, x 2… x n . Prove that the mean andvariance of the observations ax 1, ax 2,ax 3 …ax n are and a 2 σ2,respectively (a ≠ 0).
The givenn observations are x1, x2… xn.
Mean =
Variance =σ2
If eachobservation is multiplied by a and the new observations areyi, then
Therefore,mean of the observations, ax1, ax2… axn, is .
Substitutingthe values of xiand in(1), we obtain
Thus, thevariance of the observations, ax1, ax2… axn, is a2 σ2.