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Question
If the standard deviation of a variable X is σ, then the standard deviation of variable \[\frac{a X + b}{c}\] is
Options
a σ
\[\frac{a}{c}\sigma\]
\[\left| \frac{a}{c} \right| \sigma\]
\[\frac{a\sigma + b}{c}\]
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Solution
\[\left| \frac{a}{c} \right| \sigma\]
\[Y = \frac{aX + b}{c}\]
\[Y = \frac{\sum y_i}{n} = \frac{\frac{a\sum X + nb}{c}}{n}\]
\[ = \frac{a\sum X}{nc} + \frac{nb}{nc}\]
\[ = \frac{a \bar{X}}{c} + \frac{b}{c}\]
\[Var\left( X \right) = \frac{\sum \left( x_i - \bar{X} \right)^2}{n}\]
\[ = \sigma^2 \]
\[Var\left( Y \right) = \frac{\sum \left( y_i - \bar{Y} \right)^2}{n}\]
\[ = \frac{\sum \left( \frac{aX}{c} + \frac{b}{c} - \frac{a}{c} \bar{X} - \frac{b}{c} \right)^2}{n}\]
\[ = \frac{\sum \left( \frac{aX}{c} - \frac{a}{c} \bar{X} \right)^2}{n}\]
\[ = \left( \frac{a}{c} \right)^2 \frac{\sum \left( x_i - \bar{X} \right)^2}{n}\]
\[ = \left( \frac{a}{c} \right)^2 \sigma^2 \]
\[SD \left( \sigma \right) = \sqrt{\left( \frac{a}{c} \right)^2 \sigma^2}\]
\[ = \left| \frac{a}{c} \right|\sigma\]
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