T Distribution and T Value Excel Function
The T.DIST Function is categorized under Statistical functionsFunctionsThe T.DIST Function will calculate the student's t-distribution. The student’s t-distribution is a continuous probability distribution that is frequently used in testing hypotheses on small sample data sets. Learn the T Distribution Excel function and the T Value Excel function in this guide with formulas and examples. It will calculate the student’s T distribution. The student’s t-distribution is a continuous probability distribution that is frequently used in testing hypotheses on small sample data sets. This guide will show you how to use the T Distribution Excel formula and T Value Excel function step by step.
As a financial analystFinancial Analyst Job DescriptionSee a real Financial Analyst Job Description including all the skills, experience, and education required to be the successful candidate for the job. Perform financial forecasting, reporting, and operational metrics tracking, analyze financial data, create financial models, T.DIST is used in portfolio risk analysis. It is used to model asset returns to take care of heavy tails. It is so as the T distribution includes fatter tails, which gives higher values of value-at-risk at high confidence levels.
The T.DIST function was introduced in Excel 2010, hence is not available in earlier versions.
T Distribution Excel Formula
=T.DIST(x,deg_freedom,tails)
The T.DIST function uses the following arguments:
- X (required argument) – It is the numeric value at which we wish to evaluate the Student’s T Distribution.
- Deg_freedom (required argument) – It is an integer that indicates the number of degrees of freedom.
- Tails (required argument) – It specifies the number of distribution tails that would be returned. If tails =1, T.DIST returns the one-tailed distribution. If tails = 2, T.DIST returns the two-tailed distribution.
How to use the T Distribution Excel function
To understand the uses of the T.DIST function, let us consider a few examples:
Example 1
Suppose we are given the following data:
If we want to calculate the value of the function at x = -1, it can be done using the formula below:
We get the result below:
The result we get is 82.95%.
If we want to calculate the value of the function at x = 1, it can be done using the formula below:
We get the result below:
The result we get is 23.036%.
Things to remember about the T Value Excel function
- #NUM! error – Occurs when:
- The given cumulative is TRUE and deg_freedom < 1.
- The given cumulative is FALSE and deg_freedom < 0.
- VALUE! error – Occurs when the given arguments are non-numeric.
- The deg_freedom and tails arguments are truncated to integers.
- #DIV/0 error – Occurs when the given cumulative is FALSE and deg_freedom is equal to 0.
Click here to download the sample Excel file
Additional resources
Thanks for reading CFI’s guide to the T Distribution Excel function and the T Value Excel function! By taking the time to learn and master these functions, you’ll significantly speed up your financial analysis. To learn more, check out these additional resources:
- Excel Functions for FinanceExcel for FinanceThis Excel for Finance guide will teach the top 10 formulas and functions you must know to be a great financial analyst in Excel. This guide has examples, screenshots and step by step instructions. In the end, download the free Excel template that includes all the finance functions covered in the tutorial
- Advanced Excel Formulas Course
- Advanced Excel Formulas You Must KnowAdvanced Excel Formulas Must KnowThese advanced Excel formulas are critical to know and will take your financial analysis skills to the next level. Advanced Excel functions you must know. Learn the top 10 Excel formulas every world-class financial analyst uses on a regular basis. These skills will improve your spreadsheet work in any career
- Excel Shortcuts for PC and MacExcel Shortcuts PC MacExcel Shortcuts - List of the most important & common MS Excel shortcuts for PC & Mac users, finance, accounting professions. Keyboard shortcuts speed up your modeling skills and save time. Learn editing, formatting, navigation, ribbon, paste special, data manipulation, formula and cell editing, and other shortucts