CFA Practice Question
The significance level of a test is equal to which of the following ______.
A. The probability of a Type II error.
B. The probability of a Type I error.
C. (1 - the probability of a Type I error).
Explanation: The standard method of hypothesis testing involves stating the significance level as equal to the probability of incorrectly rejecting the null hypothesis. This action is defined as a Type I error. The converse of a Type I error, in which the null hypothesis is incorrectly rejected, is a Type II error, in which a false null hypothesis is mistakenly accepted.
User Contributed Comments 3
| User | Comment |
|---|---|
| mallang | TypeI error= REjecting Null Hypothesis TypeII error= Rejecting alternative Hypothesis |
| jackwez | Type I - Incorrect! Type 2 - I did TOO much work... and proved I could accept it |
| dlukas | power of a test = probability of NOT making a type II error. |