CFA Practice Question

There are 434 practice questions for this study session.

CFA Practice Question

True or False? If False, explain why.

Testing at a 5% level of significance means that you only have a 5% chance of rejecting the null hypothesis.
Correct Answer: False

This statement is accurate only if the null hypothesis is true.

User Contributed Comments 4

User Comment
bobert Would an also acceptable answer be:

False,
Testing at a 5% level of significance means that you only have a 5% chance of failing to reject the null hypothesis.

I think that is right, just want to make sure the wording is correct. Any disagreements?
mordja Bobert

its a 5% chance of type one error, ie failing to accept the null hypotheses if the hypothesis is true.

failing to reject the null when it is false is type two error.
johntan1979 Only if the null is true... otherwise, statement is incomplete and unacceptable.
robbiecow Shouldn't it be: the sign level is the probability of WRONGLY rejecting the null hypothesis if it is in fact true...

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