medium · FRM Part 1 Quantitative Analysis
A risk manager notices that the calculated χ^2 statistic for a variance test is very close to zero.
What does this likely indicate about the sample variance s^2 relative to the hypothesized variance σ_0^2?
- The sample variance is nearly equal to the hypothesized variance.
- The sample variance is much smaller than the hypothesized variance.
- The sample size n is very large.
- The sample variance is significantly larger than the hypothesized variance.
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