CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

For the hypothesis test shown at the right, the decision should be to ______.

A. fail to reject H0
B. reject H0
C. accept H0
Explanation: Because the sample data, x-bar 165, has a z-score of 2.5 (the test value) and this z-score is in the critical region (critical value is 1.645, the cutoff for the top 5% of the normal distribution), the decision is to reject H0. That is, we do not believe this sample data came from a population whose mean is 160 or less. Note that the p-value for an x-bar of 165 is 0.6%.

User Contributed Comments 3

User Comment
Bibhu I think easier option would be if test value > critical value reject H0.
jpducros Bibhu, I think your reasoning won't always work. Here it works because the alternative hypothesis is "> X" and we also have here Test value > Critical value. Have you had the alternative hypothesis "<X", you would have needed a Test value<Critical value to be able to reject Ho. Someone can confirm ?
kindal This is correct
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