Learning Quantitative Finance with R

Hypothesis testing

Hypothesis testing is used to reject or retain a hypothesis based upon the measurement of an observed sample. We will not be going into theoretical aspects but will be discussing how to implement the various scenarios of hypothesis testing in R.

Lower tail test of population mean with known variance

The null hypothesis is given by  where is the hypothesized lower bound of the population mean.

Let us assume a scenario where an investor assumes that the mean of daily returns of a stock since inception is greater than $10. The average ...