DEFINITION of 'ZTest'
A statistical test used to determine whether two population means are different when the variances are known and the sample size is large. The test statistic is assumed to have a normal distribution and nuisance parameters such as standard deviation should be known in order for an accurate ztest to be performed.
INVESTOPEDIA EXPLAINS 'ZTest'
A onesample location test, twosample location test, paired difference test and maximum likelihood estimate are examples of tests that can be conducted as ztests. Ztests are closely related to ttests, but ttests are best performed when an experiment has a small sample size. Also, ttests assume that the standard deviation is unknown, while ztests assume that it is known. If the standard deviation of the population is unknown, the assumption that the sample variance equals the population variance is made.

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