CFA CFA Level 1 Quant – Level 1

Quant – Level 1

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    • Avatar of googs1484googs1484
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        • CFA Level 3
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        Use the test statistic when the they mention a hypothesized value or test.  Also, the test statistic is when comparing sample statistic to a hypothesized value. 

      • Avatar of mvibsmvibs
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          there the key is in how they ask the question. Are they asking for a range, or test statistics to compare it to and reject or accept a hypothesis?

          Lets make ale it easy and assume mean of 5, std dev of 10. 

          1) what interval can you assume 90% of the samples will fall between?

          we know that 90% fall within 1.645 std dev of the mean. So multiply 10 by 1.645 to get 16.45. Answer will be 5 plus or minus 16.45 (-11.5 – 21.45)

          i would strongly recommend memorizing 90, 95 and 99% as well as that 68% fall within one standard deviation of the mean. 

          2) there are 25 samples drawn with a mean of 10. John wants to test his hypothesis that the mean is greater than 8.  Now you need to use a test statistic. I don’t have them in front of me so I can’t give you an example here. 

          hope this helps. 

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