CFA Practice Question

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CFA Practice Question

What type of decision is reached when the calculated value of any test statistic falls in the critical region when a false null hypothesis is being tested?

A. a correct decision
B. a Type I error
C. a Type II error
Correct Answer: A

User Contributed Comments 6

User Comment
virginia When the calculated value falls in the critical region, you do not reject H0. Not rejecting H0 while it's false, shouldn't it be a Type II error?
tony1973 if the test statistic falls in the critical region, you will reject the null hypothesis! As it is a false one, the decision is correct.
mtcfa O think the wording here is tricky. A false null is always being tested. If it falls within the critical region (i.e. not outside, not significant), than the null cannot be rejected.
tssverma yes..the question is testing whether the candidate understands the trick
mordja Is not a trick.

If you are testing a false null hypothesis (Ie you have previously found it to be false), and you now test it to find a statistically significant result then your previous decision is validated.

I see no trick here, just need to be careful reading the question.
dybacis Critical region is the set of all outcomes which cause the null hypothesis to be rejected.
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