Page 37 - FINAL CFA SLIDES DECEMBER 2018 DAY 4
P. 37

Session Unit 3:

                                                                                                        12. Hypothesis Testing



















                                What to note? Don’t worry about formula -p289!?


                • These are t-statistics - only valid for 2 populations that are

                    independent and normally distributed


                • Variance of the pooled sample is used when the sample
                    variances are assumed to be equal.



                • Formula Numerator:

                      • If the sample means are very close together, the numerator (and the t-

                          statistic itself) are small, and we do not reject equality..


                     • If the sample means are far apart, the numerator (and the t-statistic
                          itself) are large, and we reject equality.
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