I was hoping somebody could help me. I’m ASSUMING copying information out of the Schweser material is prohibited for obvious reasons. So, can somebody help me with the calculation on Page 313? I don’t understand the calculation for the test statistic - how come it’s 0.0025 / (250)^0.5? Then, it’s 0.0001/0.000158 = 6.33?

The first part is calculating the standard error which in this instance is the sample standard deviation / square root of the sample size. Raising to the power of 0.5 is the same as taking the square root of a number.

The 2nd part is calculating the test stat which is the mean of 0.1% over the standard error figure calculated in the first stage i.e. 0.000158.

I would look at the units of measurement on the return (should be percent). Percent makes sense in this case, since it is a return, and the magnitude of the return would seem better as 0.1% per day, rather than 10% per day.

My best guess (don’t have the book) is that the units of measurement are percent (but the book hasn’t made that clear), so 0.10 is 0.10% (0.001) and 0.25 is 0.25% (0.0025).