- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 5. Sampling and Estimation
- Subject 3. Standard Error of the Sample Mean

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**CFA Practice Question**

An analyst gathered the following information about a stock index:

Standard deviation of net income for all companies in the index: $3.2 million

Mean net income for all companies in the index: $2.4 million

Standard deviation of net income for all companies in the index: $3.2 million

If the analyst takes a sample of 36 companies from the index, the standard error of the sample mean (in $) is closest to ______.

A. $88,889

B. $400,000

C. $533,333

**Explanation:**The standard error of the sample mean is equal to the population standard deviation divided by the square root of the number of observations in the sample: $3,200,000 / 36

^{1/2}= $533,333.

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