Z-Test

Categories: Metrics, Trading, Education

A hypothesis test run in one of two different scenarios. Either we’re looking to test a hypothesis about a population proportion, or we’re testing a hypothesis about some other parameter (like a mean) when we know the population standard deviation.

We get to use the swaggy standard Normal distribution to help us find our p-value. That p-value is the probability that we could have gotten a result as extreme as (or more extreme than) the sample result we got, and the p-value is what we compare to our alpha-level to determine whether we should reject or fail to reject the null hypothesis.

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