Hypothesis Testing and Confidence Intervals (FRM Part 1 – Book 2 – Chapter 5)

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The written summary can be found here:

After completing this reading, you should be able to:

- Calculate and interpret the sample mean and sample variance.
- Construct and interpret a confidence interval.
- Construct an appropriate null and alternative hypothesis, and calculate an appropriate test statistic.
- Differentiate between a one-tailed and a two-tailed test and identify when to use each test.
- Interpret the results of hypothesis tests with a specific level of confidence.
- Demonstrate the process of backtesting VaR by calculating the number of exceedances.

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