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Sampling Distribution
What is a sampling distribution?
A sampling distribution is the probability distribution of a given statistic (such as the sample mean) based on a large number of samples drawn from a specific population.
What is the sampling distribution of the sample mean?
Probability distribution of means from all possible samples of size n
What is the Central Limit Theorem (CLT) and why is it important in banking?
The CLT states that the sampling distribution of the sample mean approaches a normal distribution as sample size increases, regardless of the population's shape. This allows banks to make reliable inferences from large loan or transaction datasets.
What is the shape of the sampling distribution when population is normally distributed?
Always normal, regardless of sample size
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