on page 178 how do we know to use the one-tailed test in the second example? I know this is review from L1 but I don’t remember the exact rulse and the book doesn’t explain it at all. Thanks
Are you using the Schweser book? pp178 in the CFAI text is still ethics.
That example is: Using the data from Figure 2, test the null hypothesis that the intercept term is GREATER THAN OR EQUAL TO –10.0% versus the alternative that it is less than –10.0% using a 1% significance level. It says you have a null hypothesis that is testing if something is greater than or equal to -10%, if it would have said “you have a null hypothesis to determine if the intercept is DIFFERENT from -10%”, then you would use a 2-tailed test.
Yes Darkhelmet, I am referring to Schweser Book 1 Thanks for pointing that out Wandering CFA.