CFA Practice Question

CFA Practice Question

For a one-tailed hypothesis test, the critical value of the test statistic is -2.33. Which of the following is true about the hypothesis test?
A. alpha = .01 for an upper-tailed test
B. alpha = .05 for an upper-tailed test
C. alpha = .01 for a lower-tailed test
Explanation: This is a one tailed test and the z-value of -2.33 suggests that it is a lower tailed test and that it is for a 1% level of significance.

User Contributed Comments 5

User Comment
mattg -2.33 test statistic, obviously we are testing the lower tail here, you know it is C right off
czar thanks maatg, hadnt caught that
tommyguard3 Good pooint mattg.

On the exam will they provide the Z chart or are we actually supposed to know them?
GBolt93 I believe you have to know the statistic for 68, 95, 99.8 and be able to logic from there. e.g. it's a one tailed test so the test statistic for .01 is between 2 and 3 which is the statistic for 95 and 99.8 for two tailed tests.
CalebMast I had to relearn the tables slightly. First of all, critical value must correspond to z value or -2.33 assumes only means z, not t table. This was the first concern - primary indicator here is that there are no # for population. For unknown variance (unknown population in this case, as well), we must go with the z table. Confirming z not t was the first concern. The next thing was reading the table properly. I was a little sloppy on this, so I got a consultant. This table was helpful: www.intmath.com/counting-probability/z-table.php
Once I remembered the brilliant fact that the decimal partials at the top of the graph complete the #'s at the left, it came together perfectly. The value at -2.33 is .0099 (.01). Speaking to what I mentioned above and a concern mentioned by others, everything lower-tail is negative, whereas the positives are upper-tail.
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