CFA Practice Question

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CFA Practice Question

True or False? If false, correct the statement.

A confidence interval estimate for a parameter is used to eliminate the element of chance from estimation.
Correct Answer: False

The confidence interval is used to acknowledge the element of chance in estimation.

User Contributed Comments 4

User Comment
surob Can someone explain what it means? Didn't quite understand. Thx
bobert I think it means that the because it is an estimate, it is acknowledging that there is uncertainty or chance in the estimation.

A person robs a store that you are at. The police come to you for a statement and ask how confident you feel about picking the man out of a lineup. You say 95%. You are not saying that you are 100% sure because there is a chance that you won't be able to.
epizi I think chance is about probability of the right guess.If you are given a reasonable range to choose, chance of missing(getting) the right guess is reduced(increased)
Shalva You cannot eliminate uncertainty simply by calculating the confidence interval.
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