CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

For the t-distribution, if a = 0.01 and n = 16, the t-value is ______.

A. 2.583
B. 2.602
C. 1.341
Correct Answer: B

Reading the t-table, we go to column 0.01 then down to row 16 - 1 or row 15. The value is 2.602.

User Contributed Comments 7

User Comment
SuperKnight Do we have to memorize t-table values as well?
kenchew1 Even without the table, in this case, a=0.01 => 99% confidence level. For a z-statistic, the z-value = 2.58. Since this is t-statistics, recall that its bell-curve has a lower peak and fatter tails, so for it to have the same 99% confidence level, the t-value>2.58. There is only one answer > 2.58, so the answer is B.
thekid CONFUSED...

Shouldn't we look at a/2 = 0.01/2 = 0.005 Since it is 99% C.I. that would mean 0.5% lies on each end (left & right side) of the interval...?

Someone please explain!!!
bundy a is already alpha /2
NikolaZ @kenchew, how is there only one answer above 2.58, when there is 2.602 as well?

This is particularly confusing since the t-distribution is expected to yield a large score than the z-distribution, making either 2.583 or 2.602 viable answers.

We would praobably not be asked a question like this on the exam, since a t-table is not provided, but it is good practice, and you should be using a t/z-table(s) with these questions to familiarize yourselves.
johntan1979 Answer should be 2.947.

Based on the notes, alpha (a) is level of significance. In the notes' example, a=5%, and the t-table refers to 0.05 (TWO-TAILED), df=29, t-value=2.045

Therefore, in this question, a=0.01, so look at the df=15 under 0.01 (TWO-TAILED) = 2.947
johntan1979 If you follow the method given in the question's answer, you will get the next question wrong.
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