A procedure that decides whether sample evidence is strong enough to reject a stated null hypothesis. The decision rests on a test statistic and a significance level.
Where you will meet it
Hypothesis test comes up in 7 learning outcome notes across the FRM syllabus.
A few of them:
Hypothesis Testing FRM Part I · Quantitative analysis
“A hypothesis test starts by stating two claims about a population parameter, never about the sample statistic.”
Hypothesis Testing FRM Part I · Quantitative analysis
“A confidence interval and a hypothesis test use the same ingredients: the estimate, its standard error and a critical value.”
Hypothesis Testing FRM Part I · Quantitative analysis
“The p-value is the probability, calculated assuming the null hypothesis is true, of obtaining a test statistic at least as extreme as the one observed.”
Linear Regression FRM Part I · Quantitative analysis
“A hypothesis test on a single coefficient compares the estimate with the hypothesised value in units of standard error.”
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