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**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.

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**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. |