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

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**CFA Practice Question**

Which of the following steps in hypothesis testing most likely follows collecting the data and calculating the test statistic?

A. stating the decision rule

B. specifying the significance level

C. making the statistical decision

**Explanation:**The seven steps in hypothesis testing are:

1) Stating the hypothesis

2) Identifying the appropriate test statistic and its probability distribution

3) Specifying the significance level

4) Stating the decision rule

5) Collecting the data and calculating the test statistic

6) Making the statistical decision

7) Making the economic or investment decision

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