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. |