Hi all, The terminology of Assignment question X1.1 confused me: It describes the sample standard deviation of a sample of 20 as being £500. However, the solution shows that this has been calculated as the sum of the square residuals with a denominator of 20, rather than the denominator of 19 I would have expected. I'm entirely confident on the mathematics of this point as I covered it in my maths degree (and it's summarised on http://en.wikipedia.org/wiki/Standard_deviation#Estimating_population_standard_deviation). However, does anyone have a steer on how the examiners tend to treat this sort of point? Thanks
Caveat: my knowledge of stats is limited! If I recall correctly, using n-1 instead of n is only necessary for small sample sizes (as the difference becomes small as n increases). I wonder therefore if treatment of this point has simply been dropped from the syllabus on the grounds that real world applications are likely to only involve large n?
I'm very confused - the sample variance should have denominator (n-1) however the solution doesn't mention the denominator at all... It simply equates the given sample variance 500² to the model variance var(X). Just to confuse matters further - with the method of moments you can equate either the "n denominator" or the "n-1" denominator variance formulae to the model variance var(X).