Central Limit Theorem

Actuary Forums Forums Learnings Daily Dose Central Limit Theorem

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  • #25062
    Vanshika Gupta
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      What is Central limit theorem?

      #25063
      Vanshika Gupta
      Participant

        In the study of probability theory, the central limit theorem (CLT) states that the distribution of sample means approximates a normal distribution (also known as a “bell curve”), as the sample size becomes larger, assuming that all samples are identical in size, and regardless of the population distribution shape.

        CLT is a statistical theory stating that given a sufficiently large sample size from a population with a finite level of variance, the mean of all samples from the same population will be approximately equal to the mean of the population. Furthermore, all the samples will follow an approximate normal distribution pattern, with all variances being approximately equal to the variance of the population, divided by each sample’s size.

        This is studied in depth in the CS1 exam

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      Actuary Forums Forums Learnings Daily Dose Central Limit Theorem