In the last post we saw the **methods of sampling**. In this post we will see sampling distributions.

**Student’s t-distribution: **

Student’s t-distribution is a distribution that is symmetrical about the mean and has fatter tails than a normal distribution i.e., it has more observations in the tail. T-distribution is more appropriate to use when the sample size is small, n<30.

**Confidence interval**

Confidence interval is the range of values within which a observation will lie with the probability of 1 – , where is the level of significance for the confidence interval and 1 – is the degree of confidence. For example we estimate that the probability that the observation will lie in the range 10 – 20 with 95% confidence and 5% level of significance.

**Therefore for a non normal distribution you cannot create a confidence interval if the sample size is small, i.e. n < 30.**

**hypothesis testing**….

**For solved examples please refer to the CFA Institute Books and Schweser CFA notes. The problems can be easily solved using the CFA institute approved financial calculators. Please refer to the CFA exam policy and CFA calculator guide.**
[…] exam policy and CFA calculator Guide. You may also want to read: Hypothesis testing (Part 1) Sampling and estimation (Part 2) Sampling and estimation (Part 1) Common probability distributions (Part […]