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**CFA Practice Question**

Which of the following statements is false in reference to confidence intervals and/or tests of significance? Choose the best answer.

A. The significance level is denoted by the Greek letter theta.

B. Determining the significance level of a hypothesis test after calculating the test statistic can lead to an erosion of objectivity.

C. The significance level is equal to the probability of a Type I error, and the confidence level can be found by (1 - the probability of a Type I error).

**Explanation:**The significance level is denoted by the Greek letter alpha. The significance level is equal to the probability of a Type I error, and can be found by subtracting the confidence level from the letter one. The relationship between the confidence level and the significance level is illustrated as follows:

Confidence level = (1 - significance level)

which can also be expressed as:

Confidence level = (1 - probability of a Type I error).

The Greek letter theta is used to represent the population parameter in the null and alternate hypotheses.

The remaining answers are all correct. It is important to remember that the level of significance should be determined prior to the calculation of the test statistic. Specifying the significance level after the calculation of the test statistic can detract from the objectivity of the test.

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**User Contributed Comments**
8

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

grezavi |
stupid me |

takor |
Grezavi, make that 'stupid us'. |

uviolet |
make that three |

shiva5555 |
lame question |

jpducros |
I'm with you guys ! |

JeffAu |
LOL, following statements is FALSE... and I picked C while knowing A is correct LAME |

enetis |
wow, add me to the list... ughhh frustrating |

EmmaBeale |
Yup...... |