CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

True or False? If False, correct the statement.

Suppose a 95% confidence interval for the slope (β) of the straight line regression of Y on X is given by -3.5 < β < -0.5. Then a two-sided test of the hypothesis H(0): β = -1 would result in rejection of H(0) at the 1% level of significance.
Correct Answer: False

Since H(0): β = -1 would not be rejected at α = 0.05, it would not be rejected at α = 0.01.

User Contributed Comments 7

User Comment
webII maybe I'm missing something...how does a=.05 stronger than a=.01?
danlan2 5% level is weaker than 1% level, since it can not be rejected at 5% level, it can not be rejected at 1% level
Adkins08 Confidence interval for a 99% confidence interval (alpha is 1%) must be wider than a 95% confidence interval (alpha is 5%).
Therefore, if the H(0) value is accepted at an alpha of 5%, it must be accepted at an alpha of 1%
MattNYC If the calculated value (-1) falls within the acceptance range (-3.5, -0.5) then we FAIL to reject the Null
Tukker If it is within the 95% range, it also fits within the wider 99% range. Don´t get tricked by the 1% expression!
mazen1967 we cant reject the nul at 5% segnificancy level consiquantly we cant reject at lesser level
quanttrader 99% CI is wider (ie more conservative) than 95% CI. Therefore since beta = -1 falls within the 95% CI, it must also fall within the 99% CI (ie alpha = 1%)
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