CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

A consumer group wants to prove that the average hospital costs are more than $931 per day. If the decision is to fail to reject H0: μ < 931, the conclusion should be that ______.

A. there is no evidence that μ < 931.
B. the average daily cost of the hospital is less than $931.
C. there is no evidence that the average daily cost of the hospital is more than $931.
Correct Answer: C

Failing to reject H0: μ <= 931 means that there is no evidence that the statement μ <= 931 is false. So, there is no evidence that the statement μ > 931 is true. In terms of this problem, this means that there is no evidence that the average daily cost of the hospital is more than $931.

User Contributed Comments 5

User Comment
ambar See the difference between Q1, 2 and 3
johntan1979 Type II error... no conclusive evidence.
johntan1979 Also, failing to reject null is not the same as accepting null.
lndcobra In the question H_0 is μ < 931, and they fail to reject it, so C is also incorrect, as it could mean that hospital costs equal to 931 (μ = 931)
wpaxtonn21 @johntan1979 this is not a type II error.
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