We build a 95% confidence interval around the expected return
If teh desired return falls in the 2.5% lower tail of the distribution the client can be 95% confident that the minimum will not be violated
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if you are in the lowest 2.5 tail, does not that leave at least 97.5% of the values greater than you. basiclly the goal will be met at least 97.5% of the time and up to 99.9999% of the time, depending on how much into the tail the desired return is…
Well one of the 2 is incorrect since CFAI on page 196 sais it is 2.5% probability of failing…
Also this is a one tail test, I putting 2.5% in the left tail and looking at what is above it, the fact that I looked up this value using the 95% does not make it a 2 tail test…
I am reading Schweser Level I material and when the put 5% in one tail, they say they are 95% confident!
So how is it here that we are putting 2.5% in the tail and saying we are 95% confident ? And how is it that CFAI is not saying the same thing as Schweser…
Your original statement says : “We build a 95% confidence interval around the expected return”
when you build a confidence interval “around” something it is a two tailed test period. it doesn’t matter if you just “look” at one tail, the test is still structured as two.