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Postby chandniwadhwani92 » Tue Oct 28, 2014 10:08 am

Airthemetic mean return has statistical property of being an unbiased estimator of the true means of the underlying distribution of returns..

What does this sentence means?????/

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Postby edupristine » Wed Oct 29, 2014 8:16 am

You need to first understand the meaning of "Unbiased estimator".

A statistic is said to be an "unbiased estimate" of a given parameter, when the mean of the sampling distribution of that statistic can be shown to be equal to the parameter being estimated.

Hence, the statement implies that the arithmetic mean return of some sample set of observations can be taken to be the representative of the mean of the entire distribution of returns.

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