CFA Practice Question
There are 10,000 stocks in the market. You wish to estimate the mean Sharpe Ratio for these stocks, so you take a random sample of size 144. The average Sharpe Ratio for the sample is 0.4851. The standard deviation for the population is known to be 0.3082. The 95% confidence interval for the population mean Sharpe Ratio is:
A. 0.4348 0.5354
B. 0.4190 0.5512
C. 0.4429 0.5273
Explanation: From CLT, we know the sample mean is normally distributed around the population mean.
User Contributed Comments 5
| User | Comment |
|---|---|
| bd1984 | Can anyone provide a clearer explanation? |
| dipu617 | Didn't get it??!!!! |
| dream007 | huh? |
| jann | standard deviation will be 0.3082/sqrt(144) =0.02568 for a 95% confidence interval, it will be 1.96*.02568 = 0.05033 mean +/- this will get u the answer |
| GBolt93 | Jann is correct, though they should have made it clearer that .3082 referred to the sharpe ratio, not the deviation used to calculate said ratio. |