- 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 decision should be to ______.

A. reject H

_{a}B. reject H

_{0}C. fail to reject H

_{0}**Explanation:**Because the sample data, x-bar 16.8, has a z-score of -0.82 (the test value) and this z-score is not in the critical region (critical value is -2.33, the cutoff for the bottom 1% of the normal distribution), the decision is to fail to reject H

_{0}. That is, we believe this sample data came from a population whose mean is 17 or more. Note that the p-value for an x-bar of 16.8 is 0.2119 or about 21%.

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**User Contributed Comments**
2

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

dimanyc |
Your rejection region here is everything below the critical value. Since the test value is above it, you don't reject. |

hannovanwyk |
- remember that this is a one tailed test, and that a test statistic greater than 0 would be problematic given that it's standardized. i would say acceptance region -2.33<=x<=0 |