Confidence Interval for a Population mean, with a known Population Variance
We have the following assumptions:
- Population variance σ2 is known
- Population is normally distributed
Under these assumptions, the confidence interval estimate will be given as follows:
Example
Let’s take an example to compute this.
We take a sample of 16 stocks from a large population with a mean return of 5.2%. We know that the population standard deviation is 1.5%.
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