- CFA Exams
- CFA Level I Exam
- Study Session 3. Quantitative Methods (2)
- Reading 11. Hypothesis Testing
- Subject 8. Hypothesis Tests Concerning the Mean: T-Test vs. Z-Test

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**CFA Practice Question**

The standard deviation of a large population is 20. To test:

H(0): μ <= 4 vs. H(A): μ > 4

At level of significance .05, a sample size of 100 will be taken. You will reject H(0) if ______.

A. XBAR >= 7.3

B. XBAR >= 7.8 or XBAR <= .2

C. XBAR >= 7.8

**Explanation:**Z = (XBAR- μ)/(S/SQRT(n))

1.645 = (XBAR - 4)/2

XBAR = 7.29

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**User Contributed Comments**
5

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

jpducros |
Where does that 1,645 is coming from ? |

jpducros |
ok, my mistake, I still have difficulties in remembering all the principal thresholds. |

Jurgen |
It comes from the z table. Given that the significance level is 0.05, we are looking for the 0.95 level which gives a z of 1.65. |

lawlee |
Isn't this a two-sided test with z=1.96? |

kimmykim23 |
lawlee if the Ho was stated as = 4 then it would be a two tailed test. But since it's <= it's a one tailed test. |