T-test for two means

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dezert

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In Schweser, it says that you do not have to know the 2 formulas for t-stat, testing the equality of population variances. Then it later says that you DO have to memorize them. Which one is it? The 2 formulas are ridiculous and I dont think im goin to bother. I took stats before and i dont remember them being this ugly. For anyone which Schweser Book 1, its on page 256.
 
I don't have Schweser - what are the two formulas? The usual formula for a T-test is the pooled variance test. Are they also proposing some Fisher test (i.e., with two different standard deviations in the denominator)?
 
yeah the ones with sp2, where the formula for degrees of freedom is large. there are 2 formulas, one when variances are assumed to be equal, and one when they are not.
 
I built a note card w/ all of the different calculations of test statistics for t-tests, F-tests, Z-tests, X-tests from Hypothesis Testing and Regression Chapters. Once you consolidate it all and realize the objectives of each different test... it becomes easier to understand. No worries... a first pass had me pretty friggin' stressed out too. I picked it up and reviewed it later and found it all made alot of sense. Consider the concepts and how you might use hypothesis testing: one of the Ethical concepts is to maintain a reasonable basis... hypothesis testing of statistical parameters for securities, portfolios, and benchmarked portfolios is one way to help you generate a reasonable basis when analyzing adoption of securities to add to a portfolio - for one example. I feel sorry for the dude who sits in his lonely office thinking this sh%# up... but I'm thankful for him too... because he's come up w/ some useful stuff. Thankfully, we have software to take care of the back end.
 
" hypothesis testing of statistical parameters for securities, portfolios, and benchmarked portfolios is one way to help you generate a reasonable basis when analyzing adoption of securities to add to a portfolio"

Good luck with that. It's almost alwys the wrong way to make a portfolio decision.

"I feel sorry for the dude who sits in his lonely office thinking this sh%# up"

That's because you don't know where it comes from. All you see are some very small results from some very beautiful mathematics. Back in the 70's there was an auto racer named Niki Lauda who burned his face off. Some idiot reporter told him that he felt sorry for him. Lauda replied that he felt sorry for the reporter because the reporter had never felt what he had felt.
 
I think that if you forgoe knowign the two equations it will not make or break you. If you know it, then great, if not don't stress out. Everyone has said that Quant is relatively straightforward on Level 1. Now worry about FSA :)
 
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