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Question:

The sum of 100 observations and the sum of their squares are 400 and 2475, respectively. Later on, three observations, 3, 4 and 5, were found to be incorrect. If the incorrect observations are omitted, then the variance of the remaining observations is?

9.00

8.25

8.00

8.50

Solution:

Let Σᵢ₌₁¹⁰⁰ xᵢ = 400 and Σᵢ₌₁¹⁰⁰ xᵢ² = 2475.
Three incorrect observations are 3, 4, and 5.
If the incorrect observations are omitted, then the sum of the remaining 97 observations is:
Σᵢ₌₁⁹⁷ xᵢ = 400 - (3 + 4 + 5) = 388
The sum of the squares of the remaining 97 observations is:
Σᵢ₌₁⁹⁷ xᵢ² = 2475 - (9 + 16 + 25) = 2425
Variance = (Σᵢ₌₁⁹⁷ xᵢ²) / N - (Σᵢ₌₁⁹⁷ xᵢ / N)²
Variance = 2425/97 - (388/97)²
Variance = 25 - (4)² = 25 - 16 = 9