We have 345 observations on the hourly logreturn for a certa

We have 345 observations on the hourly log-return for a certain bond index, and we want to use a Kolmogorov-Smirnov test of the goodness of fit for a standard normal distribution. The first step in performing this test is to transform our data set returns, What is the purpose of this transformation? Our software calculates the upper and lower statistics as Find an appropriate approximation for the P value of this test. How would you interpret the result?

Solution

a) the purpose of the transformation is to convert the data to standard normal distribution.

b) p- value = 0.05

c) p-value < the KS test statistic, accept that the normal fit is good