- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 6. Hypothesis Testing
- Subject 1. Introduction

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**CFA Practice Question**

The meaning of "testing the hypothesis μ <= 6 versus μ > 6 at a 5% significance level" is ______

B. if the population mean μ is <= 6, the probability of deciding wrongly is at most 5%.

C. if the population mean μ is > 6, the probability of deciding wrongly is at most 5%.

A. if the population mean μ is > 6, the probability of deciding wrongly is at least 95%.

B. if the population mean μ is <= 6, the probability of deciding wrongly is at most 5%.

C. if the population mean μ is > 6, the probability of deciding wrongly is at most 5%.

Correct Answer: B

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**User Contributed Comments**
5

User |
Comment |
---|---|

dcfa |
Type I Error=level of significance=probability of rejecting null hypothesis when it is true |

bidisha |
H0= u>6 , h1 = u<= 6 |

Seancfa1 |
Bidisha...? |

enetis |
u<=6 at 5% significance implies that prob u>6 is 95% |

dbedford |
We are basically saying "If we accept the research hypothesis that the population average is less than or equal to 6, then there is a 5% chance we'll be wrong |