between the Monte Carlo simulations and the results obtained from the covariance matrix. We demonstrate that the probability distribution of the estimated parameters cannot be got from ‘local’ methods such as the ones used earlier [@Fin92]. Since our main purpose in this paper is to demonstrate the validity of the statistical model, we initially use the simplified Newtonian model of the waveform. In the Newtonian case there are fewer parameters of the signal that one has to deal with, making the investigations simpler, analytically as well as computationally. We then specialize to the first post-Newtonian case. Here, although the discrepancy is larger, the problem is similar at a qualitative level.

Following Finn [@Fin92] we obtain an equation which relates the estimated parameters to the actual parameters of the signal for a given noise realisation. This equation is non-linear. Finn linearises the equation and obtains the errors in terms of the covariance matrix. Here we do not linearise the equation. We find that the equation has multiple solutions for the parameters in a certain sense and it is this multiplicity of roots forming islands in the parameter space which contributes significantly to the errors. Thus the problem is of a global 