a question

[stormhold]

I am in the lognormal distribution chapter and saw a problem about estimating the stock's annualized return. the book says
http://farm3.static.flickr.com/2622/3865939260_2109d578c7.jpg

I know VAR(X)=E(X^2)-(E(X))^2. But on the book, why there's a n/(n-1)?

Thanks.

[iromio]

I am in the lognormal distribution chapter and saw a problem about estimating the stock's annualized return. the book says
http://farm3.static.flickr.com/2622/3865939260_2109d578c7.jpg

I know VAR(X)=E(X^2)-(E(X))^2. But on the book, why there's a n/(n-1)?

Thanks.

i too stuck on this....

[NoMoreExams]

Think back to stats 101, if you divide by n, you get population variance. Obviously you don't have "all" the data, you have a sample so you need to convert it to to sample variance, hence the n/(n-1) factor.

[stormhold]

Think back to stats 101, if you divide by n, you get population variance. Obviously you don't have "all" the data, you have a sample so you need to convert it to to sample variance, hence the n/(n-1) factor.

Can you give me a link that further explains this?

[NoMoreExams]

Does this help: http://en.wikipedia.org/wiki/Variance#Population_variance_and_sample_variance

[rahim]

n/n-1 is multiplied to make the variance unbiased.
you can find this in any mathematical statistics book