# finance leveraging

My Symbolic interaction, structural/functional analysis, and conflict theory are arguably the

most important and influential approaches in sociology. This task will train you in applying them

in your analysis of practical issues. Your submission will consist of two paragraphs. The

sociological problem is poverty.

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HYPOTHESIS/SIGNIFICANCE TESTING

· A hypothesis is simply a statement, an assumption, or some testable belief or opinion.

· Hypothesis testing is the process by which the belief is tested by statistical means.

· The essence of testing statistical hypothesis is t o decide whether the claim ( research

hypothesis) is supported by empirical evidence obtained through a random sample.

Notations:

· A hypothesis is denoted by H.

· Ho=Null H ypothesis (a hypothesis of “no difference ” or “no relationship ”)

· H1 or H a = A lternative Hypothesis ( Research H ypothesis)

Steps:

· Formulate the null and alternative hypotheses

· Establish the significance level and identify the acceptance and rejection

· Select the test statistic and procedure

· Collect the sample and compute the value of the test statistic

· Make the decision (accept or reject the null hypothesis).

Parametric & Non Parametric Tests

Parametric tests :

To use parametric tests, the following assumptions should hold:

· The observations must be independent i.e. the selection of any one cas e should not affect the

chances for any other case to be included in the sample

· Its observations should be drawn from normally distributed populations

· These populations should have equal variances

· The measurement scales should be at least interval so that arithmetic operations can be used

with them

Note:

· Parametric tests are more powerful than non -parametric tests because their data are derived from

interval and ratio measurement.

· They are more useful the more you know about your subject matter, since know ledge about

subject matter can be built into parametric models.

Non - parametric tests :

· Also known as distribution free tests or flexible functional forms

· One must use statistical technique called non -parametric if it satisfies at least one of the

followin g five types of criteria.

v The data entering the analysis are enumerative (i.e. count data representing the number of

observations in each category or cross -category)

v The data are measured and/or analyzed using a nominal scale of measurement

v The data are me asured and/or analyzed using an ordinal scale of measurement

v The inference does not concern a parameter in the population distribution

v The probability distribution of the statistic upon which the analysis is based is not dependent

upon specific information or assumption about the population(s) which the sample(s) are

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drawn but only general assumptions, such as a continuous and/or symmetric population

distribution.

One and two sided tests

· One - sided (tailed) test

This is a statistical test in which the al ternative hypothesis specifies that the population parameter

lies entirely above, or entirely below, the value specified in the null hypothesis.

e.g. Ho: m = 50,000

Ha: m > 50,000 is a one -sided test since Ha specifies that m lies on one particular side o f

50,000

· Two - sided (tailed) test

An alternative hypothesis that specifies that the parameter can lie on either side of the value

indicated by H o is called a two -sided or two -tailed test.

e.g. Ho: m = 50,000

Ha: m 50,000 is a two -sided test

Type I & Type II Errors

· Type I error

Committed by rejecting a true null hypothesis (