Hi fellow candidates, I’m struggling to understand question 3b from Reading 10 (Quant. Methods - Sampling Estimation) page 540… does anybody know why they calculate the z-score by dividing by the standard error (pop. std. dev/sqrt(n)) instead of just std. dev?. Please help!
Thanks!
Pre Disclaimer, Quant is not my strong suite, but here we go:
Because the given Std. Dev. is on population, and the problem is asking of a sample size of 4 (i.e. less than 30), the standard error of the sample mean is applied. See page 520 for further content. Basically, I think you are confusing the population vs. sample.
Post Disclaimer, Quant still is not my strong suite!