Using point optimal test of a simple null hypothesis for testing a composite null hypothesis via maximized Monte Carlo approach
King’s Point Optimal (PO) test of a simple null hypothesis is useful in a number of ways, for example it can be used to trace the power envelope against which existing tests can be compared. However, this test cannot always be constructed when testing a composite null hypothesis. It is suggested in the literature that approximate PO (APO) tests can overcome this problem, but they also have some drawbacks. This paper investigates if King’s PO test can be used for testing a composite null in the presence of nuisance parameters via a maximized Monte Carlo (MMC) approach, with encouraging results.