CFA Practice Question

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CFA Practice Question

We want to test the claim that a steady diet of wolfsbane will cause an 18-year-old werewolf to lose EXACTLY 10 lbs. over 5 months. A random sample of 49 werewolf was taken, yielding an average weight loss over 5 months of 12.5 lbs with S = 7 lbs. Let alpha = .02. What is the calculated value suitable for testing the above hypothesis?

A. 12.5
B. 7 x 2.5
C. 2.5
Correct Answer: C

t(calculated) = (12.5-10)/(7/SQRT(49)) = 2.5

User Contributed Comments 9

User Comment
isida test statistic question: (sample statistic - null value) / standard error standard error = standard deviation / sqrt N
Masterkang Obviously, he read to many Harry Potter Books...
achu we know it's t-test because S sample sd, not population std dev.
steved333 Yes, but sample size is large, so it doesn't matter. T-stat is the same as Z in this case.
poomie83 Was alpha there as useless information?
ybavly @poomie83
johntan1979 Agree with steved333. n>30, so Z.
sgossett86 the equation for variance is single bernoulli variable
Shaan23 You guys need to read the notes. One we dont know if this is normal or not. Population variance is unknown. Whenever population variance is unknown always jump to t-test.
But remember t-test approaches the z test when n becomes big.
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