An analyst evaluates 30 paired monthly returns for two stock indices to determine if the mean difference of the returns is zero. The number of degrees of freedom for the t-test in this scenario is: | Chartered Financial Analyst Level 1 Quiz - LeetQuiz
Chartered Financial Analyst Level 1
Explanation:
The correct answer is B (29).
Explanation:
For a paired comparisons test, the t-statistic has n−1 degrees of freedom, where n is the number of paired observations.
Here, n=30, so the degrees of freedom are 30−1=29.
Why not A or C?
A (28) is incorrect because it assumes n−2 degrees of freedom, which is not applicable for a paired test.
C (58) is incorrect because it represents the degrees of freedom for a hypothesis test concerning the equality of means of two independent samples, calculated as n1+n2−2.
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An analyst evaluates 30 paired monthly returns for two stock indices to determine if the mean difference of the returns is zero. The number of degrees of freedom for the t-test in this scenario is:
