- CFA Exams
- CFA Level I Exam
- Study Session 3. Quantitative Methods (2)
- Reading 11. Hypothesis Testing
- Subject 6. The Decision Rule

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**CFA Practice Question**

For the hypothesis test shown below, the conclusion should be that ______

A. the population proportion is less than 0.42.

B. there is no evidence that the population proportion is greater than or equal to 0.42.

C. there is no evidence that the population proportion is less than 0.42.

**Explanation:**Because the test value (-1.7) is in the critical region (less than -1.645), we reject H

_{0}. Thus, we conclude H

_{a}(he population proportion is less than 0.42).

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**User Contributed Comments**
6

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

haarlemmer |
hehe, i think this is the answer. the question is what is the 'conclusion'. although b is ok, b is not the conclusion. stating b doesn't in fact answers the quesiton after all. |

lagoste |
the most correct answer would be "The population proportion is less than 0.42 with 95% confidence". |

prajacti |
why is B not correct? |

cbeliveau |
I think when you reject H0 a "decision has been made" and you can definitively say that the pop is less than .42 rather than just saying there is a lack of evidence. When you do not reject H0 then you are saying "there is no evidence that xyz is less than .30". |

cbeliveau |
.3 was just an arbitrary number btw |

GBolt93 |
A would definitely lose points on a stats exam. Technically correct, but that's way to conclusive of an answer. B is wrong since you can't make statements about the value of the null, only reject or fail to reject it. |