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T.DIST Function

Calculates the student's t-distribution

T Distribution and T Value Excel Function

The T.DIST Function is categorized under Statistical functions. 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 analyst, 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:

  1. X (required argument) – It is the numeric value at which we wish to evaluate the Student’s T Distribution.
  2. Deg_freedom (required argument) – It is an integer that indicates the number of degrees of freedom.
  3. 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:

 

T Distribution Function in Excel

 

If we want to calculate the value of the function at x = -1, it can be done using the formula below:

 

T.DIST Function - Example 1

 

We get the result below:

 

T.DIST Function - Example 1a

 

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:

 

T Distribution Excel Function Example

 

We get the result below:

 

T Value Excel Function Example

 

The result we get is 23.036%.

 

Things to remember about the T Value Excel function 

  1. #NUM! errorOccurs when:
    1. The given cumulative is TRUE and deg_freedom < 1.
    2. The given cumulative is FALSE and deg_freedom < 0.
  2. VALUE! errorOccurs when the given arguments are non-numeric.
  3. The deg_freedom and tails arguments are truncated to integers.
  4. #DIV/0 errorOccurs 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 Finance
  • Advanced Excel Formulas Course
  • Advanced Excel Formulas You Must Know
  • Excel Shortcuts for PC and Mac

Free Excel Tutorial

To master the art of Excel, check out CFI’s FREE Excel Crash Course, which teaches you how to become an Excel power user.  Learn the most important formulas, functions, and shortcuts to become confident in your financial analysis.

 

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