Page 36 - FINAL CFA SLIDES DECEMBER 2018 DAY 4
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Session Unit 3:
12. Hypothesis Testing
LOS 12.h: Identify the appropriate TS and interpret the results for a HT concerning the equality of the
population means of 2 at least approximately normally distributed populations, based on independent
random samples with 1) equal or 2) unequal assumed variances, p. 288
Test of 1 mean aside, in practice we may want to compare the means of two populations:
e.g. returns from long-term debt vs equity?
Say independent samples drawn from 2
normally distributed populations:
2 1. Population variances unknown but 1. Population variances unknown but
Scenarios!
assumed to be equal, p289 assumed to be unequal, p.290
Use pooled variance….
The denominator (SE) is individual
sample variances for each sample.
Add/average the variances of the 2
sample means to get SE in the
denominator.
