Which set of hypotheses is incorrectly formulated? H0: θ < θ0 versus Ha: θ > θ0 H0: θ ≥ θ0 versus Ha: θ < θ0 H0: θ ≤ θ0 versus Ha: θ > θ0

Option A is incorrectly stated since the appropriate formulation should be: H0: θ ≤ θ0 versus Ha: θ >θ0.We state the null and alternative hypotheses such that they account for all possible values of the parameter.Option A does not account for the condition that θ = θ0.

Question Of The Week: Level 1 - Quantitative Methods (6) - CFA Level 1

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  25 Mar 2020 at 6:19 pm
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  Option A is incorrectly stated since the appropriate formulation should be: H0: θ ≤ θ0 versus Ha: θ >θ0.
  
  We state the null and alternative hypotheses such that they account for all possible values of the parameter.
  
  Option A does not account for the condition that θ = θ0.
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