BIS - Principles for Sound Stress Testing Practice...The depth and duration of the financial crisis has led many banks and supervisory authorities to que...

Lessons

- What is Hypothesis Testing
- Test Statistic, Type I and type II Errors, and Significance Level
- Decision Rule in Hypothesis Testing
- p-Value in Hypothesis Testing
- Selecting the Appropriate Test Statistic
- Hypothesis Testing with t-statistic
- Hypothesis Testing with z-statistic
- Tests Concerning Differences in Means
- Paired Comparision Tests - Mean Differences When Populations are Not Independent
- Hypothesis Tests Concerning Variances
- Chi-square Test – Test for value of a single population variance
- F-test - Test for the Differences Between Two Population Variances
- Non-parametric Tests

# Hypothesis Testing with t-statistic

t-statistic is the computed value of the test statistic based on the Student’s t distribution.

t-statistic with n-1 degrees of freedom is calculated as follows:

In the hypothesis test, we compare the t-statistic with the critical t-value at a given level of significance and appropriate degrees of freedom.

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