Which of the Following Best Describes an Unbiased Estimator

question 101

Multiple Choice

Which of the following best describes an unbiased estimator?

• A) any sample statistic used to approximate a population parameter
• B) a sample statistic which has an expected value equal to the value of the population parameter
• C) a sample statistic whose value is usually less than the value of the population parameter
• D) any estimator whose standard error is relatively small

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Definitions:

Cost of Equity

The theoretical earnings paid by a business to its equity holders as compensation for the risk they take by investing.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often paying fixed dividends.

Tax Rate

The share of earnings upon which a person or corporation is taxed.

Market Risk Premium

The Market Risk Premium refers to the extra yield an investor anticipates receiving for investing in a volatile market portfolio over risk-free securities.