- CFA Exams
- CFA Exam: Level I 2021
- Study Session 3. Quantitative Methods (2)
- Reading 11. Hypothesis Testing
- Subject 4. Type I and Type II Errors in Hypothesis Testing

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**CFA Practice Question**

For the hypothesis test below where the decision is reject H

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.

_{0}, a Type I error could have been committed. A correct discussion of the error would involve ______

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 H

_{0}when H_{0}is in fact true. In terms of this problem, this means concluding that the population mean is less than 90 (rejecting H_{0}: μ > 90) when in fact the mean is 90 or more (H_{0}: μ > 90 is true).###
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