## Quants & Stats - Hypothesis Testing

namratatwr94
Posts: 6
Joined: Mon Apr 10, 2017 4:44 am

### Quants & Stats - Hypothesis Testing

I have a doubt in Hypothesis Testing that while applying z-value to calculate Confidence Interval, the following two formulas are given in Schwezer :

1) Mean +- z value * standard deviation
2) Mean +- z value * standard error

How do we know when to use which of these two formulas for calculating confidence interval?

edupristine
Finance Junkie
Posts: 825
Joined: Wed Apr 09, 2014 6:28 am

### Re: Quants & Stats - Hypothesis Testing

When you are calculating confidence interval of the sample, the right formula is to use standard error. As we know from sampling distribution, the mean of the sample is the mean of the population while the standard deviation of the sample is calculated using standard error. The correct formula is (2)

namratatwr94
Posts: 6
Joined: Mon Apr 10, 2017 4:44 am

### Re: Quants & Stats - Hypothesis Testing

ok thanks @edupristine