CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

Consider the following information about a fund. The fund has been in existence for 3 years. Over this period it has achieved a mean monthly return of 3% with a sample standard deviation of monthly returns of 5%. It was expected to earn a 2.5% mean monthly return over the 3-year period.

You want to test a claim that the investment disciplines of the fund result in a standard deviation of monthly returns of less than 6%.

The test statistic for conducting this hypothesis test is a ______.
A. t-test with 35 degrees of freedom
B. F-test with 35 degrees of freedom
C. chi-square test with 35 degrees of freedom
Explanation: The test statistic is chi-square with 36-1 = 35 degrees of freedom.

User Contributed Comments 3

User Comment
Pooh testing if variance from a single population is statistically different from a hypothesized variance (standard deviation).
Profache Use Chi-Square for tests concerning a single population variance.

Use F-test for tests concerning variances of two populations.
bdilindi Why not t-test vs X^2 test though?
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