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**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.

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**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. |