Hypothesis Testing (2025 Level I CFA Exam – Quantitative Methods – Module 6)

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Topic 1 – Quantitative Methods
Reading 6 – Hypothesis Testing
0:00 Introduction and Learning Outcome Statements
4:11 LOS: Define a hypothesis, describe the steps of hypothesis testing, and describe and interpret the choice of the null and alternative hypotheses.
10:51 LOS: Compare and contrast one-tailed and two-tailed tests of hypotheses.
12:16 LOS: Explain a test statistic, Type I and Type II errors, a significance level, how significance levels are used in hypothesis testing, and the power of a test.
15:21 LOS: Explain a decision rule and the relation between confidence intervals and hypothesis tests, and determine whether a statistically significant result is also economically meaningful.
19:49 LOS: Explain and interpret the p-value as it relates to hypothesis testing.
26:48 LOS: Describe how to interpret the significance of a test in the context of multiple tests.
31:57 LOS: 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 normally distributed and the variance is (1) known or (2) unknown.
34:18 LOS: 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 equal assumed variances.
37:40 LOS: Identify the appropriate test statistic and interpret the results for a hypothesis test concerning the mean difference of two normally distributed populations.
39:18 LOS: 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.
45:09 LOS: Compare and contrast parametric and nonparametric tests, and describe situations where each is the more appropriate type of test.
46:16 LOS: Explain parametric and nonparametric tests of the hypothesis that the population correlation coefficient equals zero, and determine whether the hypothesis is rejected at a given level of significance.
53:28 LOS: Explain tests of independence based on contingency table data.