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Review_summary - Expectation Variance Covariance...

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Expectation Variance Covariance Correlation
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Conditional Distribution Standardization and the Normal distribution To standardize a random variable X, one has to subtract its mean and divide by its standard deviation. Example with X such that E(X) = μ and Std(X) =σ is: Any linear combination of independent and identically distributed (iid) normal random variables has a normal distribution. Other useful Distributions Sample
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Hypothesis Testing We want to tell if a given value of our estimator (based on sample information) is close to its true value (the population value). Step 1: Define the null and the alternative hypotheses. For example H 0 : θ = 28 and the alternative hypothesis (the alternative to the null). Note: There are 2 kinds of alternative hypotheses H A : θ≠ 28 which leads to a two- tailed test, and H A θ < 28 (or H A θ > 28) which corresponds to a one-tailed test. Step 2: Compute the test statistic (its distribution depends on whether the population variance is known. Note: M
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This note was uploaded on 07/11/2011 for the course ECON 321 taught by Professor Louis during the Fall '09 term at Waterloo.

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Review_summary - Expectation Variance Covariance...

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