- CFA Exams
- Dec. 2020 Level 1
- Study Session 3. Quantitative Methods: Application
- Reading 11. Hypothesis Testing

### Reading 11. Hypothesis Testing

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### Learning Outcome Statements

Reading 11. Hypothesis Testing | |
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1. Introductiona. define a hypothesis, describe the steps of hypothesis testing, and describe and interpret the choice of the null and alternative hypotheses; | |

2. Null Hypothesis and Alternative Hypothesisb. distinguish between one-tailed and two-tailed tests of hypotheses; | |

3. Test Statistic and Significance Levelc. explain a test statistic, Type I and Type II errors, a significance level, and how significance levels are used in hypothesis testing; | |

4. Type I and Type II Errors in Hypothesis Testingc. explain a test statistic, Type I and Type II errors, a significance level, and how significance levels are used in hypothesis testing; | |

5. The Power of a Testd. explain a decision rule, the power of a test, and the relation between confidence intervals and hypothesis tests; | |

6. The Decision Rulee. distinguish between a statistical result and an economically meaningful result;
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7. The Relationship between Confidence Intervals and Tests of Significanced. explain a decision rule, the power of a test, and the relation between confidence intervals and hypothesis tests; | |

8. Hypothesis Tests Concerning the Mean: T-Test vs. Z-Testg. identify the appropriate test statistic and interpret the results for a hypothesis test concerning the population mean of both large and small samples when the population is normally or approximately distributed and the variance is 1) known or 2) unknown; | |

9. Hypothesis Tests Concerning Differences between Meansh. identify the appropriate test statistic and interpret the results for a hypothesis test concerning the equality of the population means of two at least approximately normally distributed populations, based on independent random samples with 1) equal or 2) unequal assumed variances; | |

10. Hypothesis Tests Concerning Mean Differences (Paired Comparisons Test)i. identify the appropriate test statistic and interpret the results for a hypothesis test concerning the mean difference of two normally distributed populations; | |

11. Hypothesis Tests Concerning a Single Variancej. identify the appropriate test statistic and interpret the results for a hypothesis test concerning 1) the variance of a normally distributed population, and 2) the equality of the variances of two normally distributed populations based on two independent random samples; | |

12. Hypothesis Tests Concerning Differences between Variancesj. identify the appropriate test statistic and interpret the results for a hypothesis test concerning 1) the variance of a normally distributed population, and 2) the equality of the variances of two normally distributed populations based on two independent random samples; | |

13. Parametric and Non-Parametric Testsk. distinguish between parametric and nonparametric tests and describe situations in which the use of nonparametric tests may be appropriate. |