CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

If the significance level of a test is the probability of incorrectly rejecting the null hypothesis, then the "power of a test" is defined as which of the following? Choose the best answer.

A. The probability of a Type II error
B. The probability of a Type I error
C. The probability of correctly rejecting the null hypothesis
Correct Answer: C

If the significance level of a test is the probability of incorrectly rejecting the null hypothesis (a Type I error), then the power of the test is defined as the probability of correctly rejecting the null hypothesis. In other words, the power of a test is equal to (1 - the probability of a Type II error). The standard method of hypothesis testing involves stating only the significance level, which is equal to the probability of a Type I error.

User Contributed Comments 1

User Comment
johntan1979 A is beta
B is alpha
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