CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

To test H(0): μ = 20 vs. H(A): μ ≠ 20, a sample of 400 will be taken from a large population whose standard deviation is 5. H(0) will be rejected if XBAR ≥ 20.5 or XBAR ≤ 19.5. The level of significance of this test is approximately ______.
A. 0.05
B. 0.02
C. 0.10
Explanation: Half Confidence Interval = Z * S/SQRT(N)
.5 = Z * 5/20
2 = Z
Area beyond Z = .023
So, for both tails, the significance level used = .023 + .023 = .046.

User Contributed Comments 4

User Comment
mulira where is the 0.023 from?
Sundevil using the formula xbar +(-) reliability factor * standard deviation / sq rt n

20 + Zscore * (5 / 20) = 20.5 solve for Z

.023 is from the z table
chamad The Z table gives you 0.9772. You're looking for the area below this value: 1-0.9772=0.023
1a2a You will not have a Z table on the test and none of the questions will require you to use a Z table. Nonetheless, they do include it in the books.
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