- CFA Exams
- CFA Exam: Level I 2021
- Study Session 3. Quantitative Methods (2)
- Reading 11. Hypothesis Testing
- Subject 2. Null Hypothesis and Alternative Hypothesis

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**CFA Practice Question**

You have drawn a random sample of size n from a specified population and you test the hypothesis that MU = 50. Suppose that you are unable to reject the hypothesis. Your correct interpretation of the outcome is that ______.

B. probability is high that in the population, MU = 50

C. the sample data are not inconsistent with the hypothesis that in the population, MU = 50

A. in the population, MU = 50

B. probability is high that in the population, MU = 50

C. the sample data are not inconsistent with the hypothesis that in the population, MU = 50

Correct Answer: C

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**User Contributed Comments**
13

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

surob |
Why not all are correct? |

ConorOG |
you can't say the population , MU = 50 without sampling the entire population. |

bdaguy |
And just because MU=50 is a possible answer, it doesn't mean that it's a likely answer. Therefore, B is rejected. |

apiccion |
Being unable to reject something does NOT mean that: A) It is true. B) There is a high or 'higher' probability that it's true. For example, consider that I want to prove that there are no invisible pink unicorns. Then my null hypothesis is: "There are invisible pink unicorns". Obviously, any experiment I do will fail to disprove the null hypothesis. But clearly the notion that invisible pink unicorns exists is absurd. This is similar to proving the existence of god. You can never disprove the existence of god, but being unable to prove the existence of something does not imply that it must exists. |

bundy |
However apiccion there is proof of God..so bad analogy |

JakeZ |
lets not get into there guys :) |

ybavly |
made me smile :) agreed JakeZ |

Boltz |
It is a Typo I Error, tonreduce the probabilities of error, the sample size n must be increase. |

Shaan23 |
Bundy will be an interesting CFA. He actually might be ethical. that was funny |

dellius |
there is no god |

ashish100 |
bundy no one f**king knows so dont assume you know for sure. |

ashish100 |
and Shaan23's definitely not gonna be ethical. "he actually might be ethical" Go to a different industry and f things up over there. Ima call the SEC on you if I ever see you doing something sketchy |

jgoff508 |
Wow, this escalated quickly. ^^^ |