- 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, a Type I error could have been made. A correct explanation of the error would involve ______.
A. concluding that 70% or less of adults feel that vitamin supplements can prevent illness when in fact more than 70% feel that vitamin supplements can prevent illness.
B. going along with the conclusion that more than 70% of adults feel that vitamin supplements can prevent illness when in fact 70% or less feel that vitamin supplements can prevent illness.
C. concluding that more than 70% of adults feel that vitamin supplements can prevent illness when in fact 70% or less feel that vitamin supplements can prevent illness.
Explanation: Because the decision was to reject H0, a Type I error - rejecting H0 when H0 is in fact true - could have been made.
User Contributed Comments 4
| User | Comment |
|---|---|
| danlan | Reject H0 while it is true. |
| dimanyc | can someone once a for all explain clearly the diff-ce between "going along" and "concluding"? i keep making the same mistake! thx!!! |
| tabulator | "Going along" - Type II error "Concluding" - Type I error |
| homersimpson | Why sometimes we calculate the confidence interval by multiplying the standard deviation, while sometimes the standard error? |