- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 6. Hypothesis Testing
- Subject 8. Tests Concerning a Single Mean

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**CFA Practice Question**

The Santa Rosa Homeowners are trying to prove that the homes in their area are less than 5 miles from the nearest fire station. The data and hypothesis test is shown below. The conclusion should be that ______

B. the homes in the Santa Rosa area are, on average, less than 5 miles from the nearest fire station.

C. the homes in the Santa Rosa area are, on average, 5 miles or more from the nearest fire station.

A. there is no evidence that the homes in the Santa Rosa area are, on average, 5 miles or more from the nearest fire station.

B. the homes in the Santa Rosa area are, on average, less than 5 miles from the nearest fire station.

C. the homes in the Santa Rosa area are, on average, 5 miles or more from the nearest fire station.

Correct Answer: B

Rejecting H

_{0}(μ ≥ 5) means that μ < 5 is true. So, in terms of this story, our conclusion is that the homes in the Santa Rosa area are, on average, less than 5 miles from the nearest fire station.###
**User Contributed Comments**
2

User |
Comment |
---|---|

johans |
What is wrong with A? |

rufi |
if we reject H0, mean we have evidence that it is less than 5 miles |