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Medium · Probability & Statistics · Quant Trader interview question · central-limit-theorem, probability, statistics, portfolio-management
A portfolio manager is analyzing the daily returns of a large basket of stocks. Assume the daily return of each stock is independent and identically distributed (i.i.d.) with a finite mean and variance. However, the exact distribution of individual stock returns is unknown and could be non-normal (e.g., uniform, exponential, or a mixture of distributions). According to the Central Limit Theorem, what distribution does the sum (or average) of these daily stock returns converge to as the number of