Hi, another question from qbank which i do not understand and i will like to seek your views. Robert Patterson, an options trader, believes that the return on options trading is higher on Mondays than on other days. In order to test his theory, he formulates a null hypothesis. Which of the following would be an appropriate null hypothesis? Returns on Mondays are: A) not greater than returns on other days. B) greater than returns on other days. C) less than returns on other days. I choose ans C. But the correct ans is A. I read the statement many times, but it seems to me that both ans A and C refers to options trading is lower on mondays than on other days which for the null hypothesis, Ho. Is it because there are some specific words to use or note on when forming the statements for hypothesis? thanks
The null always has the 'equals to" sign. For this question the null would be that the mean return is less than or equal to the return on other days, which is another way of saying ‘not greater than’
SeeEfAye Wrote: ------------------------------------------------------- > The null always has the 'equals to" sign. For this > question the null would be that the mean return is > less than or equal to the return on other days, > which is another way of saying ‘not greater than’ +1 … totally correct
oh i see… thanks for the guidance
The alternative hypothesis is determined by the theory or the belief. Robert Patterson (the options trader in the question) specifies the null as the hypothesis that he wishes to reject (in favor of the alternative).