Articles
How to Read Student’s t Table
Student’s t distribution table has the following structure: The row represents the upper tail area, while the column ...
Student’s t Distribution
Student’s t distribution, or simply called t-distribution, is a form of continuous probability distributions which is fo...
Confidence Interval for a Population Mean, when the Distribu...
When the distribution is normal, we use the z-statistic when the population variance is known and we use t-statistic whe...
Confidence Interval for a Population mean, with an Unknown P...
If the population variance is not known, then we do the following change to the above confidence interval formula: Su...
Confidence Interval for a Population mean, with a known Popu...
We have the following assumptions: Population variance σ2 is known Population is normally distributed Under these ...
Confidence Interval Estimates
Along with point estimate we may also want to find a range of values within which our population parameter lies with a c...
Point Estimates
A point estimate is a single statistic value that is the “best guess” for the parameter value (such as population mean)....
Parameter Estimation
In statistics, statistical inference refers to drawing conclusion based on the data. Statistical inferences are drawn in...
Standard Error of the Sample Mean
The standard error of the sample mean is calculated using the following formula. Note that the larger the sample size...
Central Limit Theorem
The Central Limit Theorem is a fundamental theorem of probability and describes the characteristics of the population of...
Time Series and Cross Sectional Data
In investment analysis, we observe two types of data, namely, time-series data and cross-sectional data. Time-series da...
Stratified Random Sampling
Stratified random sampling is a sampling method that goes one step further than simple random sampling. It can be used i...
Sampling Error
Sampling error is the difference between the sample statistics (such as sample mean) and the corresponding population pa...
Simple Random Sampling and Sampling Distribution
Simple Random Sampling Simple random sampling is a type of sampling method, in which each element of the population has ...
Continuously Compounded Rate of Return
In contrast to discrete compounding, continuous compounding means that the returns are compounded continuously. The freq...
Discretely Compounded Rate of Return
A discretely compounded rate of return is simply a compounded rate of return with a discrete compounding frequency such ...
Lognormal Distribution and Stock Prices
The concept of lognormal distribution is very closely related to the concept of normal distribution. Let’s say we have ...
Safety-first Ratio
Roy’s Safety first criterion states that the optimal portfolio minimizes the probability that portfolio return, RP, fall...
Shortfall Risk
Shortfall risk refers to the probability that a portfolio will not exceed the minimum return level (target return; bench...
Calculating Probabilities Using Standard Normal Distribution
Once we have the z-scores, we can use the standard normal table to calculate the probabilities. The standard normal tabl...
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