Statistical Inference

Prerequisites

• SVI 102 Probability & the Return Model

Learning Objectives

• Explain what statistical inference adds on top of Tier 100, and the three inference tasks.
• State the three tasks of inference and explain why every estimate carries sampling uncertainty (the sampling distribution and standard error).
• Construct and correctly interpret a confidence interval, stating what the confidence level does and does not promise.
• Frame a trading question as a null and alternative hypothesis (one- or two-sided) and build a Wald/t test statistic.
• Frame implied-versus-realized as the Variance Risk Premium VRP = σ_IV² − σ_RV², measured as a time series.
• Explain what a rank is and the robustness-for-power trade you make by using it.

Module Schedule