CFA Practice Question

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.

User Contributed Comments 4

User Comment
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.
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