#### Transcript of 1SHT Example

Let's discuss one-sample testing for the mean when the sample size is large...

...large samples mean n> 30

1SHT

**1SHT**

...remember to let the data guide you...

What reference value will you use?

let's use the long-term returns (5-yr) in our calculations.

it appears that the data is suggesting that low risk funds perform better in the long run...

do low risk funds really perform better?

they do perform better

they do not perform better

which statement belongs in the NULL?

which statement belongs in the ALT?

is this a one- or two- tailed test?

One Sample Hypothesis Testing

for the mean, large sample sizes

This Prezi was arranged by

Jennifer J. Edmonds, PhD

Wilkes University

jennifer.edmonds@wilkes.edu

compares one sample to a reference group, or assumed value from the population.

than average

...and now to fill in some of the details of the sample data

(the reference value, the sample mean, etc.)

Keep in mind that you will need to sort the risk variable, and isolate the LOW risk funds only...

=AVERAGE(...)

=STDEV(...)

=COUNT(...)

how many low risk funds are there?

what reference value is appropriate?

That completes step 1!

The reference value (or comparison) is the 10.8% average return rate.

u<=10.8

u>10.8

10.8

this is exactly what you type into those cells

the absolute value of

...so what conclusion is the right one?

Step 2

time for Step 3 - State the Conclusions and Make a Decision

p-value > alpha

reject or do not reject the null?

and what does that conclusion mean?

Low risk funds do perform better over a 5-yr period, compared to average performance.

Let's recap what just happened...

The mutual funds data suggests that low risk funds perform slightly better than average, and we wanted to verify that this is true.

So we examined the null hypothesis that low risk funds do not perform any better.

...and by performing a 1SHT for the mean, we determined that they do indeed perform better.

Our claim was correct!

1SHT Template

Keep in mind that you will need to sort the risk variable, and isolate the LOW risk funds only...

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