Hypothesis testing explained step by step. Null vs alternative hypothesis, t-test, z-test, p-value, Type I and Type II errors with examples.
H<sub>0</sub>: status quo (what we try to reject). H<sub>a</sub>: what we want to prove. We never "accept" H<sub>0</sub>, only fail to reject.
Type I (α): reject true H<sub>0</sub> (false positive). Type II (β): fail to reject false H<sub>0</sub> (false negative). Power = 1 - β.
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Test Statistic (mean)
Where: μ<sub>0</sub> = hypothesized mean
Test for Difference in Means
Where: For independent samples
Free covers one Quants module. Premium opens all 10 subjects and 59 modules of CFA Level 1.
Future Value
Single lump sum compounding
Present Value
Discounting future cash flows
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Use when:
Avoid when:
A Type I error occurs when a researcher:
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