Page 5 - FINAL CFA I SLIDES JUNE 2019 DAY 4

Session Unit 3:

12. Hypothesis Testing, p274
LOS 12.a: Define a hypothesis, describe the steps of hypothesis testing, and describe

and interpret the choice of the null and alternative hypotheses.

…statement about the value of a population parameter developed for testing a theory or
belief e.g. the mean daily returns of shares is positive!

Key steps, p.273: The Null (Ho) & Alternative Hypothesis (Ha)

Ho = the one the researcher wants to reject.
Say, μ is the population mean and μ0 is the
hypothesized value of the population mean.
Ho: μ = μo,
Ho: μ ≤ μo,
Ho: μ ≥ μ0,

Ha = the conclusion reached if we reject Ho.

Ha: μ ≠ μo,

Ha: μ > μ0,
Ha: μ < μo,

The logic?

Since you can never really prove anything with
statistics, when Ho is discredited, the implication is that
the Ha is valid/supported (note: not accepted).