Page 19 - FINAL CFA SLIDES DECEMBER 2018 DAY 4

Session Unit 2:
8. Statistical Concepts & Market Returns (C/A/C/B)

C. Use the t-statistic at α/2 and n – 1 degrees of freedom when the population variance is unknown. While
the z-statistic is acceptable when the sample size is large, sample size is not given here, and the t-statistic is
always appropriate under these conditions.

A. When the sample size is large, and the central limit theorem can be relied upon to assure a
sampling distribution that is normal, either the t-statistic or the z-statistic is acceptable for
constructing confidence intervals for the population mean. The t-statistic, however, will provide a
more conservative range (wider) at a given level of significance.

Home work: Try, challenge problems, p. 270