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**CFA Practice Question**

If no other estimator of a given parameter has a sampling distribution with a smaller variance, the estimator used is best characterized as ______.

A. efficient

B. unbiased

C. consistent

**Explanation:**An unbiased estimator is efficient if no other unbiased estimator of the same parameter has a sampling distribution with smaller variance.

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**User Contributed Comments**
4

User |
Comment |
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agottsc |
I am confused, where does the question say that the estimator is unbiased? |

dipu617 |
yeah.... where does it say so???!!!! Anybody?? |

Andy552 |
It's just a definition. An estimator is unbiased if on average it is an accurate estimate of the population. There may be a number available. An estimator is the most efficient of the possible unbiased estimator set, if it has a sampling distribution with the lowest variance. |

ashish100 |
Thanks Andy. |