P-Value

AAA

DEFINITION of 'P-Value'

The level of marginal significance within a statistical hypothesis test, representing the probability of the occurrence of a given event. The p-value is used as an alternative to rejection points to provide the smallest level of significance at which the null hypothesis would be rejected. The smaller the p-value, the stronger the evidence is in favor of the alternative hypothesis.

P-values are calculated using p-value tables, or spreadsheet/statistical software.

INVESTOPEDIA EXPLAINS 'P-Value'

Because different researchers use different levels of significance when examining a question, a reader may sometimes have difficulty comparing results from two different tests.

For example, if two studies of returns from two particular assets were done using two different significance levels, a reader could not compare the probability of returns for the two assets easily. For ease of comparison, researchers will often feature the p-value in the hypothesis test and allow the reader to interpret the statistical significance themselves. This is called a p-value approach to hypothesis testing.

RELATED TERMS
  1. P-Test

    A statistical method used to test one or more hypotheses within ...
  2. T-Test

    A statistical examination of two population means. A two-sample ...
  3. Bonferroni Test

    A type of multiple comparison test used in statistical analysis. ...
  4. Statistically Significant

    The likelihood that a result or relationship is caused by something ...
  5. Probability Distribution

    A statistical function that describes all the possible values ...
  6. Binomial Distribution

    A probability distribution that summarizes the likelihood that ...
Related Articles
  1. Personal Finance

    Does Your Investment Manager Measure ...

  2. Investing Basics

    10 Books Worth Investing In

  3. Mutual Funds & ETFs

    5 Ways To Measure Mutual Fund Risk

  4. Bonds & Fixed Income

    Find The Highest Returns With The Sharpe ...

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center