- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 8. Hypothesis Testing
- Subject 7. Test of a Single Mean
CFA Practice Question
The Santa Rosa Homeowners are trying to prove that the homes in their area are less than 5 miles from the nearest fire station. The data and hypothesis test is shown below. The conclusion should be that ______
B. the homes in the Santa Rosa area are, on average, less than 5 miles from the nearest fire station.
C. the homes in the Santa Rosa area are, on average, 5 miles or more from the nearest fire station.
A. there is no evidence that the homes in the Santa Rosa area are, on average, 5 miles or more from the nearest fire station.
B. the homes in the Santa Rosa area are, on average, less than 5 miles from the nearest fire station.
C. the homes in the Santa Rosa area are, on average, 5 miles or more from the nearest fire station.
Correct Answer: B
Rejecting H0 (μ ≥ 5) means that μ < 5 is true. So, in terms of this story, our conclusion is that the homes in the Santa Rosa area are, on average, less than 5 miles from the nearest fire station.
User Contributed Comments 2
| User | Comment |
|---|---|
| johans | What is wrong with A? |
| rufi | if we reject H0, mean we have evidence that it is less than 5 miles |