Page 15 - FINAL CFA I SLIDES JUNE 2019 DAY 4
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Session Unit 3:
12. Hypothesis Testing
LOS 12.d: Explain a decision rule, the power of a test, and the relation between
confidence intervals and hypothesis tests, p. 283
Example: CI: Using option portfolio data from the previous examples, construct a 95% CI (using z) for
the population mean daily return over the 250-day sample period. Should Ho: µ = 0 be rejected?
At SL = 5% (CI = 95%) , z CV for Z0.025 = 1.96 and –Z0.025 =
–1.96. Thus, given a sample mean = 0.1%, CI:
We Reject
Ho: µ = 0!
Is 0 within this CI range? So?
Recall?
What was our
conclusion then?
