medium · Quantitative Finance
According to the Law of Large Numbers, what happens to the sample average of independent identically distributed (i.i.d.) random variables as the sample size n increases?
- It remains a random variable with constant variance σ^2.
- It converges in probability to the true population mean μ.
- It converges to a normal distribution with mean μ.
- Its variance increases in proportion to √(n).
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