CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

Select the correct statement(s).

I. An estimator is efficient if the sample size exceeds 30.
II. A consistent estimator is an estimator where the sample size exceeds 30.
Correct Answer: Neither of these statements are correct.

User Contributed Comments 6

User Comment
polanki why
poomie83 consistent estimator has no relation to the magic number 30. It is do with the estimates close to the value of the popln parameter. Sample mean is a consistent est of the popln mean.
poomie83 Efficient est is the unbiased est of the sample parameter wheere no other sampling dist has a smaller variance
johntan1979 From the notes:

A consistent estimator is one for which the probability of accurate estimates increases as sample size increases.

Sample size > 30 does not explain consistency.
sgossett86 Efficient if the variance is low. Consistent if the more samples cluster more towards the statistic intended to derive.
ibrahim18 It's important to note the following:

Desirable properties of an estimate:
1) Consitency: As you increase the sample size, the the probability of accuracy increases.
2) Unbiased: The sample estimate gives us the exact population parameter
3) Efficient: It minimises variance

Please note that consistency has nothing to do with N>30. This is the property of a non normal variable that becomes normal as long as N>30.

Also note that the the degree of confidence interval is 1 - alpha, where alpha is the level of confidence. For degree of confidence of 95%, alpha which is the level of confidence is 5%.

The degree of confidence tells us what % of confidence we have that our estimate would fall within the stated interval. Degree of confidence has nothing to do with the population.
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