CFA Practice Question

There are 434 practice questions for this study session.

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

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.
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