T-Test

Loading the player...

What is a 'T-Test'

A T-test is a statistical examination of two population means. A two-sample t-test examines whether two samples are different and is commonly used when the variances of two normal distributions are unknown and when an experiment uses a small sample size. For example, a t-test could be used to compare the average floor routine score of the U.S. women's Olympic gymnastic team to the average floor routine score of China's women's team.

BREAKING DOWN 'T-Test'

The test statistic in the t-test is known as the t-statistic. The t-test looks at the t-statistic, t-distribution and degrees of freedom to determine a p value (probability) that can be used to determine whether the population means differ. The t-test is one of a number of hypothesis tests. To compare three or more variables, statisticians use an analysis of variance (ANOVA). If the sample size is large, they use a z-test. Other hypothesis tests include the chi-square test and f-test.

RELATED TERMS
  1. Z-Test

    A statistical test used to determine whether two population means ...
  2. Analysis Of Variances - ANOVA

    An analysis of the variation between all of the variables used ...
  3. Central Limit Theorem - CLT

    A statistical theory that states that given a sufficiently large ...
  4. Sampling Distribution

    A probability distribution of a statistic obtained through a ...
  5. Sample

    A subset containing the characteristics of a larger population. ...
  6. Sampling

    A process used in statistical analysis in which a predetermined ...
Related Articles
  1. Investing

    What's a T-Test?

    T-Test is a term from statistics that allows for the comparison of two data populations and their means. The test is used to see if the two sets of data are significantly different from one another. ...
  2. Professionals

    Interpreting Statistical Results

    CFA Level 1 - Test Statistics and Interpreting Results
  3. Professionals

    Sampling and Estimation

    CFA Level 1 - Sampling and Estimation- sampling error, in depth information on confidence intervals and t-distributions
  4. Fundamental Analysis

    Explaining Standard Error

    Standard error is a statistical term that measures the accuracy with which a sample represents a population.
  5. Professionals

    Calculating Confidence Intervals

    CFA Level 1 - Confidence Intervals - Calculations
  6. Fundamental Analysis

    How Does Sampling Work?

    Sampling is a term used in statistics that describes methods of selecting a pre-defined representative number of data from a larger data population.
  7. Economics

    What is Systematic Sampling?

    Systematic sampling is similar to random sampling, but it uses a pattern for the selection of the sample.
  8. Active Trading Fundamentals

    Hypothesis Testing in Finance: Concept & Examples

    When you're indecisive about an investment, the best way to keep a cool head might be test various hypotheses using the most relevant statistics.
  9. Professionals

    Correlation and Regression

    CFA Level 1 - Correlation and Regression
  10. Fundamental Analysis

    What is a Representative Sample?

    In statistics, a representative sample accurately represents the make-up of various subgroups in an entire data pool.
RELATED FAQS
  1. What assumptions are made when conducting a t-test?

    Learn what a t-test is, and discover the five standard assumptions that are made regarding the validity of sampling and data ... Read Answer >>
  2. What percentage of the population do you need in a representative sample?

    Learn about representative samples and how they are used in conjunction with other strategies to create useful data with ... Read Answer >>
  3. How can a representative sample lead to sampling bias?

    Learn how using representative samples alone is not enough to make sampling bias negligible and why elements such as randomization ... Read Answer >>
  4. What's the difference between a representative sample and a convenience sample?

    Learn the difference between convenience sampling and representative sampling and the advantages and disadvantages of each ... Read Answer >>
  5. What is the difference between systematic sampling and cluster sampling?

    Learn about the differences between systematic sampling and cluster sampling, including how the samples are created for each ... Read Answer >>
  6. What are some common financial sampling methods?

    Read about the differences between various common financial sampling methods for financial analysts, statisticians, marketers ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center