T Distribution

AAA

DEFINITION of 'T Distribution'

A type of probability distribution that is theoretical and resembles a normal distribution. A T distribution differs from the normal distribution by its degrees of freedom. The higher the degrees of freedom, the closer that distribution will resemble a standard normal distribution with a mean of 0, and a standard deviation of 1.

The T distribution is also known as the "Student's T Distribution".

INVESTOPEDIA EXPLAINS 'T Distribution'

The use of a T distribution is precluded by the standard deviation of the population parameter being unknown and allows the analyst to approximate probabilities, based on the mean of the sample, the population, the standard deviation of the sample and the sample's degrees of freedom. As the sample's degrees of freedom approaches 50, the T distribution will virtually be identical to the normal distribution.

RELATED TERMS
  1. Degrees Of Freedom

    In statistics, the number of values in a study that are free ...
  2. Acceptance Sampling

    A statistical measure used in quality control. A company cannot ...
  3. Nonparametric Statistics

    A statistical method wherein the data is not required to fit ...
  4. Coefficient Of Variation - CV

    A statistical measure of the dispersion of data points in a data ...
  5. Standard Deviation

    1. A measure of the dispersion of a set of data from its mean. ...
  6. Probability Distribution

    A statistical function that describes all the possible values ...
Related Articles
  1. Personal Finance

    Does Your Investment Manager Measure ...

  2. Mutual Funds & ETFs

    5 Ways To Measure Mutual Fund Risk

  3. Bonds & Fixed Income

    Find The Highest Returns With The Sharpe ...

  4. Economics

    How A Limited Government Affects A Country's ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

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

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

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

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. 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 ...
Trading Center