Question:

In setting the confidence interval for the population mean of a normal or approximately normal distribution, and given that the sample size is small, Student's t-distribution is the most appropriate approach when the variance is: 
A. unknown. 
B. large. 
C. known. 

Answer = A 
When the sample size is small (and the population is normally or approximately normally distributed), the Student's t-distribution is preferred if the variance is unknown. 

CFA Level I 
"Sampling and Estimation," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David E. 
Runkle 
Section 4.2 

 

 

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