Investment - return / risk Chapter 13

Return : mean, median (14,15,18)

Risk : standard deviation, Coefficient of variation (CV = standard + deviation / mean
Mean (A) < Mean (B)
SD (A) < SD (B) => A and B are not comparable
CV (A) < CV (B)
-> Return (A) < return (B) Chapter 4
-> risk (A) < risk (B)

mean = return
risk = SD
 Hypothesis testing
Step 1 State the hypotheses

null-> H0: (ex: H=20)

atternative-> HA: (ex: H>20/ H<20/ H#20)
Step 2 Decision rule
Reject H0 if Z>z aphla if HA: µ >µ0p-value=P(z>z_alpha)
Z < -Z alpha if HA: µ < µ0p-value =P(z< -z_alpha)
Step 3 Conclusion if HA: µ # µ0 : p-value =2P(z>z_alpha if z_alpha>0
Because Z > Z alpha = 1,65 =2P(z< -z_alpha) if Z_alpha<0)
we reject H0
There is enough
envidence to conclude
that
 z_alpha>0
ha) if Z_alpha<0)