CFA CFA Level 1 Question of the Week: Level 1 – Quantitative Methods

Question of the Week: Level 1 – Quantitative Methods

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    • MarkMeldrum
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      When we do not reject a true null, we:

      • A. commit a Type 1 error.
      • B. commit a Type 2 error.
      • C. make the correct decision.
    • mincemeat23
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      These questions always make my head spin.

    • fabian
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      Here you go:

    • mincemeat23
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      Oh that’s right – I’ve seen that before somewhere!

    • MarkMeldrum
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      The correct answer is Option C.

      There are four possible outcomes when we test a null hypothesis:

      • We reject a false null hypothesis.  This is a correct decision.
      • We reject a true null hypothesis.  This is called a Type I error.
      • We do not reject a false null hypothesis.  This is called a Type II error.
      • We do not reject a true null hypothesis.  This is a correct decision.
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