1. T

    Type I and II error

    Can someone please explain to me how to calculate the probability of getting Type I and II errors? and is it true that if we increase the confidence level, it would reduce probability of getting type I error? and if we increase n, it would help reducing the probability of getting type II error...
  2. Nicole Seaman

    P1.T2.20.14. Hypothesis testing

    Learning objectives: Construct an appropriate null hypothesis and alternative hypothesis and distinguish between the two. Differentiate between a one-sided and a two-sided test and identify when to use each test. Explain the difference between Type I and Type II errors and how these relate to...
  3. K

    Confuse about the Type I error and Type II error

    Hi everyone In the Model Validation Topic, I am confused why type I error leads to "increase losses" and type II error "increase opportunity cost". since I know that the type I error is reject H0 given H0 is True and type II error is accept H0 given H0 is False but not sure how these link to...
  4. Nicole Seaman

    YouTube T2-13 Type I versus II error and power

    Type I error mistakenly rejects the true null. The Type II error mistakenly accepts a false null. Significance, α, is the desired Prob[Type I error]. Power is 1 - β = 1 - Prob[Type II error] but is more difficult to compute because, while there is only one true null, there can be many false...
  5. Nicole Seaman

    P2.T5.713. Backtesting in the Basel rules (Jorion Ch.6)

    Learning objectives: Define and identify type I and type II errors. Explain the need to consider conditional coverage in the backtesting framework. Describe the Basel rules for backtesting. Questions: 713.1. In comparison to Basel III, which itself essentially incorporated the previous...