February 19th, 2006, 8:54 pm
The most common use of a t-test is to test whether your data is consistent with the unknown population mean ("true" mean, "underlying" mean) being some value you're interested in, often zero, when you don't know the population variance and you do know the data is normally distributed. So you might perhaps test a set of excess returns, (or excess log returns), against the hypothesis of their true mean being zero. Here you say you do know the population mean and have a sample size of 1, so I'm not sure you're doing a test in the way statisticians think of it. "z score" is fine as you're essentially measuring a distance on the standard normal distribution (the article you have referenced is too complex really for what you need to do). Tone.