- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 7. Estimation and Inference
- Subject 2. The Central Limit Theorem and Inference

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**CFA Practice Question**

The central limit theorem ______.

B. is used to determine interval estimates

C. allows us to make quite precise probability statements about the population mean by using the sample mean

D. is based on a family of symmetrical distributions defined by a single parameter

A. has the desirable properties of unbiasedness, efficiency, and consistency

B. is used to determine interval estimates

C. allows us to make quite precise probability statements about the population mean by using the sample mean

D. is based on a family of symmetrical distributions defined by a single parameter

Correct Answer: C

The central limit theorem allows us to make quite precise probability statements about the population mean by using the sample mean.

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**User Contributed Comments**
8

User |
Comment |
---|---|

aspazia |
i still do not know why! it's pathetic, i hate statistics!!! |

surob |
Because - regardless of population's distribution (whether normal or skew), the sampling of the mean is considered normally distributed as long as n>=30. Hence, its mean will be close to that of population. |

Yurik74 |
aspazia - take it easy, it's not a real statistic, it's just a begining and thanks god we don't have to learn and be able to apply the real one. What we have is just arithmetics, trust me ;) |

Vibis |
guys, by the way, what about the first one. just wondering, what CLT lacks -- unbiasedness, efficiency or consistency? |

gill15 |
It is unbiased estimator of population mean. Unbiased means that the value of the estimator is spot on with the true paramater value(Population)..so yes for sample mean it is... But for variance it is not....and about the other stuff who cares for this...dont want to keep typing... |

gill15 |
my bad...guess you do need to know this stuff...next section.. |

Thediceman |
For answer C.I think it is otherway around. The CLT give precise probability estimate of sample mean by using population mean. Anyone? |

mcbreatz |
Careful of what the question is actually asking. Just because a statement is true in another context does not mean its the answer. The most correct answer is C. Definition of Central Limit Theorem almost word for word. |