Page 10 - FINAL CFA SLIDES DECEMBER 2018 DAY 4
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Session Unit 3:
11. Sampling and Estimation
LOS 11.j: Calculate and interpret a CI for a population mean, given a ND with 1) a known PV, 2)
an unknown PV, or 3) an unknown PV and a large sample size, p258!
To work out CI (as point estimate for the population mean), you need to set level of significance
(alpha = α = 5%), required probability is 1 – α (= 95% = Degree of Confidence)
In general, CI = PE ± (RF × SE) Always α/2 = 2 tailed because CI we need lower and upper limit
where:
• PE = point estimate - value of a sample statistic of the corresponding parameter;
• RF = reliability factor – this depends on the sampling distribution of the PE & the p that the PE falls in
the CI, (1 – α); and
• SE = standard error = of the PE
