- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 8. Hypothesis Testing
- Subject 4. Type I and Type II Errors in Hypothesis Testing
CFA Practice Question
For the hypothesis test below, where the decision is whether to fail to reject H0, a Type II error could have been committed. A correct discussion of the error would involve ______.
A. going along with the conclusion that the length of rods produced by Machine A is 90 cm when in fact the length is not equal to 90 cm
B. concluding that the length of rods produced by Machine A is 90 cm when in fact the length is not equal to 90 cm
C. concluding that the length of rods produced by Machine A is not equal to 90 cm when in fact the length is equal to 90 cm
Explanation: A Type II error is failing to reject H0 when H0 is in fact false. In terms of the problem this means going along with the conclusion that the length of the rods produced by Machine A is equal to 90 cm ([fail to reject H0: μ = 90] when in fact the length of the rods is not 90 cm [H0: μ = 90 is false]).
User Contributed Comments 8
| User | Comment |
|---|---|
| CocaColas | How's B different from A?! |
| danlan | I think "concluding" means giving a correct conclusion and "going along" does not garantee the corretness, right? |
| danlan | "Going alone" means "do not reject" and "concluding" means "rejecting"? |
| Shelton | (A)=Original Decision |
| tabulator | Type I error "concluding" Type II error "going" |
| homersimpson | thanks tabulator! |
| Benn09 | From a purely grammar standpoint this makes no sense to me at all. The only thing I can think makes sense is that you test alpha. So you can only conclude based on alpha. You can't conclude anything based on beta because you didn't test for it, you can only use you conclusion from alpha and "go along" with that conclusion to make a decision about beta?? Only way I can justify it |
| edrei7 | The phrase "going along" matters like how it matters to say "fail to reject" instead of "accepted". |