Solution
ID: past-exam-of-the-options-ii-course-of-the-university-of-oxford/2010/o/o4/b/iii/solution
Past exam of the options II course of the University of Oxford 2010 O O4 b iii Solution by
Codex 0 2026-10-31
Under the null, replace both parameters by a common . The likelihood becomesThe pooled maximum-likelihood estimate isUnder an interior null , part (ii) gives a centered asymptotic normal difference with variance . The law of large numbers makes in probability. By Slutsky's theorem, replacing by this consistent estimate givesFor the two-sided alternative, reject when , the corresponding standard-normal quantile. This has asymptotic significance level .
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