- 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 reject H0, a Type I error could have been committed. A correct discussion of the error would involve ______
B. going along with the conclusion that the population mean is 90 or more when in fact it is greater than 90.
C. concluding that the population mean is less than 90 when in fact it is greater than or equal to 90.
A. concluding that the population mean is 90 or more when in fact the population mean is less than 90.
B. going along with the conclusion that the population mean is 90 or more when in fact it is greater than 90.
C. concluding that the population mean is less than 90 when in fact it is greater than or equal to 90.
Correct Answer: C
A Type I error is rejecting H0 when H0 is in fact true. In terms of this problem, this means concluding that the population mean is less than 90 (rejecting H0: μ > 90) when in fact the mean is 90 or more (H0: μ > 90 is true).
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