Hypothesis Testing notes

Hypothesis Testing notes:

As the Confidence Interval (CI) decreases the Range of data falling inside it also reduces. 

for example : Mean = 9.9515

CI 95% = 9.73 - 10.16 = Range 0.43

CI 75% = 9.82 - 10.07 = 0.25

CI 25% = 9.91 - 9.98 =   0.07

CI 1 %  = 9.951-9.952= 0.001

Also, when we have large sample size the CI range will be lesser as compared to small sample size.

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Significance level(alpha)  = 1 - Confidence interval.

if my CI is 95% then my Significance level (a) = 0.05

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Continuous Probability Distribution: Brandon

1. Uniform Distributions:

Example: A bus arrives at a bus stop daily between 11:25 to 11:35 am. There is an equal probability of reaching between each minute within those 10 minutes.

- A Coin flip has only 2 outcomes. no more than 2 outcomes can be there.

- A single dice can have maximum 6 outcomes.

DISCRETE PROB. Distribution

CONTINUOUS PROB. Distribution

Problem:

Z Distribution or Normal Distribution is where MEAN = 0 and Standard Deviation = 1

3. To Z or to T ?:

4. Daily Stock return analysis:

5. Is my Data Normal?:

Always look at data Graphically first.

SOURCE: Brandon Foltz