Question #1 of 97 Question ID: 1204359

Which of the following is an accurate formulation of null and alternative hypotheses?

A) Equal to for the null and not equal to for the alternative.

B) Less than for the null and greater than for the alternative.

C) Greater than for the null and less than or equal to for the alternative.

Question #2 of 97 Question ID: 1204435

F-Table, Critical Values, 5 Percent in Upper Tail

Degrees of freedom for the numerator along top row

Degrees of freedom for the denominator along side row

10 12 15 20 24 30

25 2.24 2.16 2.09 2.01 1.96 1.92

30 2.16 2.09 2.01 1.93 1.89 1.84

40 2.08 2.00 1.92 1.84 1.79 1.74

Abby Ness is an analyst for a rm that specializes in evaluating rms involved in mineral extraction. Ness

believes that the earnings of copper extracting rms are more volatile than those of bauxite extraction rms.
In order to test this, Ness examines the volatility of returns for 31 copper rms and 25 bauxite rms. The

standard deviation of earnings for copper rms was $2.69, while the standard deviation of earnings for

bauxite rms was $2.92. Ness's Null Hypothesis is σ12 = σ22. Based on the samples, can we reject the null

hypothesis at a 90% con dence level using an F-statistic? Null is:

A) not rejected.

B) rejected. The F-value exceeds the critical value by 0.849.

C) rejected. The F-value exceeds the critical value by 0.71.

Question #3 of 97 Question ID: 1204382

If we fail to reject the null hypothesis when it is false, what type of error has occured?

A) Type II.

B) Type III.

C) Type I.
Question #4 of 97 Question ID: 1204352

Which one of the following best characterizes the alternative hypothesis? The alternative hypothesis is

usually the:

A) hoped-for outcome.

B) hypothesis to be proved through statistical testing.

C) hypothesis that is accepted after a statistical test is conducted.

Question #5 of 97 Question ID: 1204409

Student's t-Distribution

Level of Signi cance for One-Tailed Test

df 0.100 0.050 0.025 0.01 0.005 0.0005

Level of Signi cance for Two-Tailed Test

df 0.20 0.10 0.05 0.02 0.01 0.001

28 1.313 1.701 2.048 2.467 2.763 3.674

29 1.311 1.699 2.045 2.462 2.756 3.659

30 1.310 1.697 2.042 2.457 2.750 3.646

In order to test if the mean IQ of employees in an organization is greater than 100, a sample of 30 employees
is taken and the sample value of the computed test statistic, tn-1 = 1.2. If you choose a 5% signi cance level

you should:

A) reject the null hypothesis and conclude that the population mean is greater than 100.

B) fail to reject the null hypothesis and conclude that the population mean is greater than 100.

C) fail to reject the null hypothesis and conclude that the population mean is not greater than 100.

Question #6 of 97 Question ID: 1204356

The rst step in the process of hypothesis testing is:

A) to state the hypotheses.

B) the collection of the sample.

C) selecting the test statistic.

Question #7 of 97 Question ID: 1204390

Student's t-Distribution

Level of Signi cance for One-Tailed Test

df 0.100 0.050 0.025 0.01 0.005 0.0005

Level of Signi cance for Two-Tailed Test

df 0.20 0.10 0.05 0.02 0.01 0.001

24 1.318 1.711 2.064 2.492 2.797 3.745

25 1.316 1.708 2.060 2.485 2.787 3.725

A pitching machine is calibrated to deliver a fastball at a speed of 98 miles per hour. Every day, a technician
samples the speed of twenty- ve fastballs in order to determine if the machine needs adjustment. Today, the
sample showed a mean speed of 99 miles per hour with a standard deviation of 1.75 miles per hour. Assume

the population is normally distributed. At a 95% con dence level, what is the t-value in relation to the critical
value?

A) The critical value exceeds the t-value by 1.3 standard deviations.

B) The t-value exceeds the critical value by 1.5 standard deviations.

C) The t-value exceeds the critical value by 0.8 standard deviations.

Question #8 of 97 Question ID: 1204441

A manager wants to test whether two normally distributed and independent populations have equal
variances. The appropriate test statistic for this test is a:

A) t-statistic.

B) chi-square statistic.

C) F-statistic.

Question #9 of 97 Question ID: 1204431

An analyst wants to determine whether the monthly returns on two stocks over the last year were the same
or not. What test should she use, assuming returns are normally distributed?

A) Chi-square test.

B) Paired comparisons test.

C) Di erence in means test.

Question #10 of 97 Question ID: 1204366

Jo Su believes that there should be a negative relation between returns and systematic risk. She intends to
collect data on returns and systematic risk to test this theory. What is the appropriate alternative hypothesis?

A) Ha: ρ > 0.

B) Ha: ρ < 0.

C) Ha: ρ ≠ 0.

Question #11 of 97 Question ID: 1204418

In a test of the mean of a population, if the population variance is:

A) known, a t-distributed test statistic is appropriate.

B) known, a z-distributed test statistic is appropriate.

C) unknown, a z-distributed test statistic is appropriate.

Question #12 of 97 Question ID: 1204387

Which of the following statements about hypothesis testing is least accurate?

A) A Type II error is failing to reject a false null hypothesis.

B) The null hypothesis is a statement about the value of a population parameter.

C) If the alternative hypothesis is Ha: µ > µ0, a two-tailed test is appropriate.

Question #13 of 97 Question ID: 1204430

For a test of the equality of the mean returns of two non-independent populations based on a sample, the
numerator of the appropriate test statistic is the:

A) larger of the two sample means.

B) di erence between the sample means for each population.

C) average di erence between pairs of returns.

Question #14 of 97 Question ID: 1204385

Which of the following statements about hypothesis testing is least accurate?

A) A Type I error is the probability of rejecting the null hypothesis when the null hypothesis is false.

B) A Type II error is the probability of failing to reject a null hypothesis that is not true.

C) The signi cance level is the probability of making a Type I error.

Question #15 of 97 Question ID: 1204442

Joe Bay, CFA, wants to test the hypothesis that the variance of returns on energy stocks is equal to the
variance of returns on transportation stocks. Bay assumes the samples are independent and the returns are
normally distributed. The appropriate test statistic for this hypothesis is:

A) a Chi-square statistic.

B) an F-statistic.

C) a t-statistic.

Question #16 of 97 Question ID: 1204367

In order to test whether the mean IQ of employees in an organization is greater than 100, a sample of 30
employees is taken and the sample value of the computed test statistic, tn-1 = 3.4. The null and alternative

hypotheses are:

A) H0: X ≤ 100; Ha: X > 100.

B) H0: µ ≤ 100; Ha: µ > 100.

C) H0: µ = 100; Ha: µ ≠ 100.

Question #17 of 97 Question ID: 1204404

A hypothesis test has a p-value of 1.96%. An analyst should reject the null hypothesis at a signi cance level
of:

A) 3%, but not at a signi cance level of 1%.

B) 6%, but not at a signi cance level of 4%.

C) 4%, but not at a signi cance level of 2%.

Question #18 of 97 Question ID: 1204401

Of the following explanations, which is least likely to be a valid explanation for divergence between statistical
signi cance and economic signi cance?

A) Adjustment for risk.

B) Transactions costs.

C) Data errors.

Question #19 of 97 Question ID: 1204399

Which of the following statements about hypothesis testing is most accurate?

A) The power of a test is one minus the probability of a Type I error.

B) If you can disprove the null hypothesis, then you have proven the alternative hypothesis.

C) The probability of a Type I error is equal to the signi cance level of the test.

Question #20 of 97 Question ID: 1204370

Which of the following statements about hypothesis testing is most accurate?

A) A hypothesized mean of 3, a sample mean of 6, and a standard error of the sampling means of 2
give a sample Z-statistic of 1.5.

B) A Type I error is rejecting the null hypothesis when it is true, and a Type II error is rejecting the
alternative hypothesis when it is true.

C) A hypothesis that the population mean is less than or equal to 5 should be rejected when the critical
Z-statistic is greater than the sample Z-statistic.

Question #21 of 97 Question ID: 1204394

A bottler of iced tea wishes to ensure that an average of 16 ounces of tea is in each bottle. In order to
analyze the accuracy of the bottling process, a random sample of 150 bottles is taken. Using a t-distributed

test statistic of -1.09 and a 5% level of signi cance, the bottler should:

A) not reject the null hypothesis and conclude that bottles contain an average 16 ounces of tea.

B) not reject the null hypothesis and conclude that bottles do not contain an average of 16 ounces of
tea.

C) reject the null hypothesis and conclude that bottles contain an average 16 ounces of tea.
Question #22 of 97 Question ID: 1204363

George Appleton believes that the average return on equity in the amusement industry, µ, is greater than
10%. What is the null (H0) and alternative (Ha) hypothesis for his study?

A) H0: > 0.10 versus Ha: < 0.10.

B) H0: > 0.10 versus Ha: ≤ 0.10.

C) H0: ≤ 0.10 versus Ha: > 0.10.

Question #23 of 97 Question ID: 1204439

The variance of 100 daily stock returns for Stock A is 0.0078. The variance of 90 daily stock returns for Stock
B is 0.0083. Using a 5% level of signi cance, the critical value for this test is 1.61. The most appropriate

conclusion regarding whether the variance of Stock A is di erent from the variance of Stock B is that the:

A) variances are not equal.

B) variances are equal.

C) variance of Stock B is signi cantly greater than the variance of Stock A.

Question #24 of 97 Question ID: 1204368

Susan Bellows is comparing the return on equity for two industries. She is convinced that the return on

equity for the discount retail industry (DR) is greater than that of the luxury retail (LR) industry. What are the
hypotheses for a test of her comparison of return on equity?

A) H0: µDR = µLR versus Ha: µDR < µLR.

B) H0: µDR ≤ µLR versus Ha: µDR > µLR.

C) H0: µDR = µLR versus Ha: µDR ≠ µLR.

Question #25 of 97 Question ID: 1204388

Kyra Mosby, M.D., has a patient who is complaining of severe abdominal pain. Based on an examination and
the results from laboratory tests, Mosby states the following diagnosis hypothesis: Ho: Appendicitis, HA: Not

Appendicitis. Dr. Mosby removes the patient's appendix and the patient still complains of pain. Subsequent

tests show that the gall bladder was causing the problem. By taking out the patient's appendix, Dr. Mosby:

A) made a Type II error.

B) is correct.
C) made a Type I error.

Question #26 of 97 Question ID: 1204428

For a test of the equality of the means of two normally distributed independent populations, the appropriate

test statistic follows a:

A) chi square distribution.

B) F-distribution.

C) t-distribution.

Question #27 of 97 Question ID: 1204396

A goal of an "innocent until proven guilty" justice system is to place a higher priority on:

A) avoiding type I errors.

B) avoiding type II errors.

C) the null hypothesis.

Question #28 of 97 Question ID: 1204386

Which of the following statements about hypothesis testing is most accurate? A Type I error is the probability

of:

A) rejecting a true null hypothesis.

B) failing to reject a false hypothesis.

C) rejecting a true alternative hypothesis.

Question #29 of 97 Question ID: 1204422

Brandee Sho eld is the public relations manager for Night Train Express, a local sports team. Sho eld is

trying to sell advertising spots and wants to know if she can say with 90% con dence that average home
game attendance is greater than 3,000. Attendance is approximately normally distributed. A sample of the

attendance at 15 home games results in a mean of 3,150 and a standard deviation of 450. Which of the
following statements is most accurate?

A) The calculated test statistic is 1.291.

B) Sho eld should use a two-tailed Z-test.

C) With an unknown population variance and a small sample size, no statistic is available to test
Sho eld's hypothesis.

Question #30 of 97 Question ID: 1204416

Student's t-Distribution

Level of Signi cance for One-Tailed Test

df 0.100 0.050 0.025 0.01 0.005 0.0005

Level of Signi cance for Two-Tailed Test

df 0.20 0.10 0.05 0.02 0.01 0.001

18 1.330 1.734 2.101 2.552 2.878 3.922

19 1.328 1.729 2.093 2.539 2.861 3.883

20 1.325 1.725 2.086 2.528 2.845 3.850

21 1.323 1.721 2.080 2.518 2.831 3.819

In a two-tailed hypothesis test, Jack Olson observes a t-statistic of -1.38 based on a sample of 20 observations
where the population mean is zero. If you choose a 5% signi cance level, you should:

A) reject the null hypothesis and conclude that the population mean is not signi cantly di erent from
zero.

B) fail to reject the null hypothesis that the population mean is not signi cantly di erent from zero.

C) reject the null hypothesis and conclude that the population mean is signi cantly di erent from zero.

Question #31 of 97 Question ID: 1204389

Ron Jacobi, manager with the Toulee Department of Natural Resources, is responsible for setting catch-and-

release limits for Lake Norby, a large and popular shing lake. He takes a sample to determine whether the
mean length of Northern Pike in the lake exceeds 18 inches. If the sample t-statistic indicates that the mean

length of the sh is signi cantly greater than 18 inches, when the population mean is actually 17.8 inches,
the t-test resulted in:

A) both a Type I and a Type II error.

B) a Type I error only.

C) a Type II error only.

Question #32 of 97 Question ID: 1204406

Given the following hypothesis:

The null hypothesis is H0 : µ = 5

The alternative is H1 : µ ≠ 5

The mean of a sample of 17 is 7

The population standard deviation is 2.0

What is the calculated z-statistic?

A) 8.00.

B) 4.00.

C) 4.12.

Question #33 of 97 Question ID: 1204426

A test of a hypothesis that the means of two normally distributed populations are equal based on two

independent random samples:

A) is based on a Chi Square statistic.

B) is a paired-comparisons test.

C) is done with a t-statistic.

Question #34 of 97 Question ID: 1204408

A researcher is testing the hypothesis that a population mean is equal to zero. From a sample with 64
observations, the researcher calculates a sample mean of -2.5 and a sample standard deviation of 8.0. At

which levels of signi cance should the researcher reject the hypothesis?

1% signi cance 5% signi cance 10% signi cance

A) Fail to reject Reject Reject

B) Fail to reject Fail to reject Reject

C) Reject Fail to reject Fail to reject

Question #35 of 97 Question ID: 1204355

Which of the following statements least accurately describes the procedure for testing a hypothesis?
A) Develop a hypothesis, compute the test statistic, and make a decision.

B) Select the level of signi cance, formulate the decision rule, and make a decision.

C) Compute the sample value of the test statistic, set up a rejection (critical) region, and make a
decision.

Question #36 of 97 Question ID: 1204357

In the process of hypothesis testing, what is the proper order for these steps?

A) Collect the sample and calculate the sample statistics. State the hypotheses. Specify the level of
signi cance. Make a decision.

B) Specify the level of signi cance. State the hypotheses. Make a decision. Collect the sample and
calculate the sample statistics.

C) State the hypotheses. Specify the level of signi cance. Collect the sample and calculate the test
statistics. Make a decision.

Question #37 of 97 Question ID: 1204436

The test of the equality of the variances of two normally distributed populations requires the use of a test
statistic that is:

A) Chi-squared distributed.

B) z-distributed.

C) F-distributed.

Question #38 of 97 Question ID: 1204361

Jill Woodall believes that the average return on equity in the retail industry, µ, is less than 15%. What is null

(H0) and alternative (Ha) hypothesis for her study?

A) H0: µ ≥ 0.15 versus Ha: µ < 0.15.

B) H0: µ = 0.15 versus Ha: µ ≠ 0.15.

C) H0: µ < 0.15 versus Ha: µ = 0.15.

Question #39 of 97 Question ID: 1204392

Ryan McKeeler and Howard Hu, two junior statisticians, were discussing the relation between con dence

intervals and hypothesis tests. During their discussion each of them made the following statement:

McKeeler: A con dence interval for a two-tailed hypothesis test is calculated as adding and
subtracting the product of the standard error and the critical value from the sample statistic. For
example, for a level of con dence of 68%, there is a 32% probability that the true population
parameter is contained in the interval.

Hu: A 99% con dence interval uses a critical value associated with a given distribution at the 1%
level of signi cance. A hypothesis test would compare a calculated test statistic to that critical

value. As such, the con dence interval is the range for the test statistic within which a researcher
would not reject the null hypothesis for a two-tailed hypothesis test about the value of the
population mean of the random variable.

With respect to the statements made by McKeeler and Hu:

A) only one is correct.

B) both are incorrect.

C) both are correct.

Question #40 of 97 Question ID: 1204371

If the probability of a Type I error decreases, then the probability of:

A) incorrectly accepting the null decreases.

B) a Type II error increases.

C) incorrectly rejecting the null increases.

Question #41 of 97 Question ID: 1204420

Cumulative Z-Table

z 0.04 0.05 0.06 0.07 0.08 0.09

1.2 0.8925 0.8944 0.8962 0.8980 0.8997 0.9015

1.3 0.9099 0.9115 0.9131 0.9147 0.9162 0.9177

1.4 0.9251 0.9265 0.9279 0.9292 0.9306 0.9319

1.5 0.9382 0.9394 0.9406 0.9418 0.9429 0.9441

1.6 0.9495 0.9505 0.9515 0.9525 0.9535 0.9545

Maria Hu man is the Vice President of Human Resources for a large regional car rental company. Last year,
she hired Graham Brickley as Manager of Employee Retention. Part of the compensation package was the

chance to earn one of the following two bonuses: if Brickley can reduce turnover to less than 30%, he will
receive a 25% bonus. If he can reduce turnover to less than 25%, he will receive a 50% bonus (using a
signi cance level of 10%). The population of turnover rates is normally distributed. The population standard
deviation of turnover rates is 1.5%. A recent sample of 100 branch o ces resulted in an average turnover

rate of 24.2%. Which of the following statements is most accurate?

A) For the 50% bonus level, the critical value is -1.65 and Hu man should give Brickley a 50% bonus.

B) For the 50% bonus level, the test statistic is -5.33 and Hu man should give Brickley a 50% bonus.

C) Brickley should not receive either bonus.

Question #42 of 97 Question ID: 1204425

What kind of test is being used for the following hypothesis and what would a z-statistic of 1.68 tell us about

a hypothesis with the appropriate test and a level of signi cance of 5%, respectively?

H0: B ≤ 0

HA: B > 0

A) One-tailed test; reject the null.

B) Two-tailed test; fail to reject the null.

C) One-tailed test; fail to reject the null.

Question #43 of 97 Question ID: 1204405

An analyst is testing the hypothesis that the mean excess return from a trading strategy is less than or equal
to zero. The analyst reports that this hypothesis test produces a p-value of 0.034. This result most likely
suggests that the:

A) null hypothesis can be rejected at the 5% signi cance level.

B) best estimate of the mean excess return produced by the strategy is 3.4%.
C) smallest signi cance level at which the null hypothesis can be rejected is 6.8%.

Question #44 of 97 Question ID: 1204376

A survey is taken to determine whether the average starting salaries of CFA charterholders is equal to or
greater than $54,000 per year. Assuming a normal distribution, what is the test statistic given a sample of 75
newly acquired CFA charterholders with a mean starting salary of $57,000 and a standard deviation of

$1,300?

A) 19.99.

B) 2.31.

C) -19.99.

Question #45 of 97 Question ID: 1204358

Robert Patterson, an options trader, believes that the return on options trading is higher on Mondays than

on other days. In order to test his theory, he formulates a null hypothesis. Which of the following would be
an appropriate null hypothesis? Returns on Mondays are:

A) greater than returns on other days.

B) not greater than returns on other days.

C) less than returns on other days.

Question #46 of 97 Question ID: 1204429

Brandon Ratli is investigating whether the mean of abnormal returns earned by portfolio managers with an

MBA degree signi cantly di ers from mean abnormal returns earned by managers without an MBA. Ratli 's
null hypothesis is that the means are equal. If Ratli 's critical t-value is 1.98 and his computed t-statistic is
2.05, he should:

A) reject the null hypothesis and conclude that the population means are equal.

B) reject the null hypothesis and conclude that the population means are not equal.

C) fail to reject the null hypothesis and conclude that the population means are equal.

Question #47 of 97 Question ID: 1204354

Which of the following is the correct sequence of events for testing a hypothesis?
A) State the hypothesis, select the level of signi cance, compute the test statistic, formulate the
decision rule, and make a decision.

B) State the hypothesis, select the level of signi cance, formulate the decision rule, compute the test
statistic, and make a decision.

C) State the hypothesis, formulate the decision rule, select the level of signi cance, compute the test
statistic, and make a decision.

Question #48 of 97 Question ID: 1204379

Which of the following statements regarding Type I and Type II errors is most accurate?

A) A Type I error is rejecting the null hypothesis when it is actually true.

B) A Type II error is rejecting the alternative hypothesis when it is actually true.

C) A Type I error is failing to reject the null hypothesis when it is actually false.

Question #49 of 97 Question ID: 1204380

A Type I error:

A) rejects a true null hypothesis.

B) fails to reject a false null hypothesis.

C) rejects a false null hypothesis.

Question #50 of 97 Question ID: 1204417

Student's t-Distribution

Level of Signi cance for One-Tailed Test

df 0.100 0.050 0.025 0.01 0.005 0.0005

Level of Signi cance for Two-Tailed Test

df 0.20 0.10 0.05 0.02 0.01 0.001

28 1.313 1.701 2.048 2.467 2.763 3.674

29 1.311 1.699 2.045 2.462 2.756 3.659

30 1.310 1.697 2.042 2.457 2.750 3.646

In order to test whether the mean IQ of employees in an organization is greater than 100, a sample of 30

employees is taken and the sample value of the computed test statistic, tn-1 = 3.4. If you choose a 5%

signi cance level you should:

A) reject the null hypothesis and conclude that the population mean is greater that 100.

B) fail to reject the null hypothesis and conclude that the population mean is greater than 100.

C) fail to reject the null hypothesis and conclude that the population mean is less than or equal to 100.

Question #51 of 97 Question ID: 1204446

Which of the following statements about parametric and nonparametric tests is least accurate?

A) Parametric tests are most appropriate when a population is heavily skewed.

B) Nonparametric tests have fewer assumptions than parametric tests.

C) Nonparametric tests are often used in conjunction with parametric tests.

Question #52 of 97 Question ID: 1204440

The use of the F-distributed test statistic, F = s12 / s22, to compare the variances of two populations does NOT

require which of the following?

A) two samples are of the same size.

B) populations are normally distributed.

C) samples are independent of one another.

Question #53 of 97 Question ID: 1204400

Which of the following statements about statistical results is most accurate?

A) A result may be statistically signi cant, but may not be economically meaningful.

B) If a result is statistically signi cant and economically meaningful, the relationship will continue into
the future.

C) If a result is statistically signi cant, it must also be economically meaningful.

Question #54 of 97 Question ID: 1204364

Brian Ci believes that the average return on equity in the airline industry, µ, is less than 5%. What are the
appropriate null (H0) and alternative (Ha) hypotheses to test this belief?

A) H0: µ < 0.05 versus Ha: µ ≥ 0.05.

B) H0: µ < 0.05 versus Ha: µ > 0.05.

C) H0: µ ≥ 0.05 versus Ha: µ < 0.05.

Question #55 of 97 Question ID: 1204360

James Ambercrombie believes that the average return on equity in the utility industry, µ, is greater than 10%.
What is null (H0) and alternative (Ha) hypothesis for his study?

A) H0: µ = 0.10 versus Ha: µ ≠ 0.10.

B) H0: µ ≥ 0.10 versus Ha: µ < 0.10.

C) H0: µ ≤ 0.10 versus Ha: µ > 0.10.

Question #56 of 97 Question ID: 1204374

A survey is taken to determine whether the average starting salaries of CFA charterholders is equal to or
greater than $57,000 per year. Assuming a normal distribution, what is the test statistic given a sample of

115 newly acquired CFA charterholders with a mean starting salary of $65,000 and a standard deviation of
$4,500?

A) 1.78.

B) 19.06.

C) -19.06.

Question #57 of 97 Question ID: 1204414

A survey is taken to determine whether the average starting salaries of CFA charterholders is equal to or
greater than $62,500 per year. What is the test statistic given a sample of 125 newly acquired CFA
charterholders with a mean starting salary of $65,000 and a standard deviation of $2,600?

A) -10.75.

B) 0.96.

C) 10.75.

Question #58 of 97 Question ID: 1204415

The table below is for ve samples drawn from ve separate populations. The far left columns give
information on the population distribution, population variance, and sample size. The right-hand columns
give three choices for the appropriate tests: z = z-statistic, and t = t-statistic. "None" means that a test
statistic is not available.

Sampling From Test Statistic Choices

Distribution Variance n One Two Three

Non-normal 0.75 100 z z z

Normal 5.60 75 z z z

Non-normal n/a 15 t t none

Normal n/a 18 t t t

Non-normal 14.3 15 z t none

Which set of test statistic choices (One, Two, or Three) matches the correct test statistic to the

sample for all ve samples?

A) One.

B) Two.

C) Three.

Question #59 of 97 Question ID: 1204443

Critical values from Student's t-distribution for a two-tailed test at a 5% signi cance level:

df

28 2.048

29 2.045

30 2.042

A researcher wants to test a hypothesis that two variables have a population correlation coe cient equal to
zero. For a sample size of 30, the appropriate critical value for this test is plus-or-minus:

A) 2.045

B) 2.042

C) 2.048

Question #60 of 97 Question ID: 1204421

In order to test if the mean IQ of employees in an organization is greater than 100, a sample of 30 employees
is taken. The sample value of the computed z-statistic = 3.4. The appropriate decision at a 5% signi cance
level is to:
A) reject the null hypothesis and conclude that the population mean is equal to 100.

B) reject the null hypotheses and conclude that the population mean is greater than 100.

C) reject the null hypothesis and conclude that the population mean is not equal to 100.

Question #61 of 97 Question ID: 1204383

A Type II error:

A) rejects a true null hypothesis.

B) fails to reject a false null hypothesis.

C) fails to reject a true null hypothesis.

Question #62 of 97 Question ID: 1204398

Given a normally distributed random variable with a mean of 10% and a standard deviation of 14%, what is a
95% con dence interval for the return next year?

A) -17.44% to 37.44%.

B) -4.00% to 24.00%.

C) -17.00% to 38.00%.

Question #63 of 97 Question ID: 1204437

A test of the population variance is equal to a hypothesized value requires the use of a test statistic that is:

A) Chi-squared distributed.

B) F-distributed.

C) t-distributed.

Question #64 of 97 Question ID: 1204372

Which of the following statements about hypothesis testing is most accurate? A Type II error is the
probability of:

A) failing to reject a false null hypothesis.

B) rejecting a true alternative hypothesis.

C) rejecting a true null hypothesis.

Question #65 of 97 Question ID: 1204369

A researcher is testing whether the average age of employees in a large rm is statistically di erent from 35
years (either above or below). A sample is drawn of 250 employees and the researcher determines that the

appropriate critical value for the test statistic is 1.96. The value of the computed test statistic is 4.35. Given
this information, which of the following statements is least accurate? The test:

A) has a signi cance level of 95%.

B) indicates that the researcher will reject the null hypothesis.

C) indicates that the researcher is 95% con dent that the average employee age is di erent than 35
years.

Question #66 of 97 Question ID: 1204373

If a two-tailed hypothesis test has a 5% probability of rejecting the null hypothesis when the null is true, it is
most likely that the:

A) signi cance level of the test is 5%.

B) probability of a Type I error is 2.5%.

C) power of the test is 95%.

Question #67 of 97 Question ID: 1204419

Which of the following statements about test statistics is least accurate?

A) In the case of a test of the di erence in means of two independent samples, we use a t-distributed
test statistic.

B) In a test of the population mean, if the population variance is unknown, we should use a t-
distributed test statistic.

C) In a test of the population mean, if the population variance is unknown and the sample is small, we
should use a z-distributed test statistic.

Question #68 of 97 Question ID: 1204397

An analyst calculates that the mean of a sample of 200 observations is 5. The analyst wants to determine
whether the calculated mean, which has a standard error of the sample statistic of 1, is signi cantly di erent

from 7 at the 5% level of signi cance. Which of the following statements is least accurate?:

A) The mean observation is signi cantly di erent from 7, because the calculated Z-statistic is less than
the critical Z-statistic.

B) The null hypothesis would be: H0: mean = 7.

C) The alternative hypothesis would be Ha: mean > 7.

Question #69 of 97 Question ID: 1204407

An analyst conducts a two-tailed test to determine if mean earnings estimates are signi cantly di erent from
reported earnings. The sample size is greater than 25 and the computed test statistic is 1.25. Using a 5%

signi cance level, which of the following statements is most accurate?

A) The analyst should reject the null hypothesis and conclude that the earnings estimates are
signi cantly di erent from reported earnings.

B) To test the null hypothesis, the analyst must determine the exact sample size and calculate the
degrees of freedom for the test.

C) The analyst should fail to reject the null hypothesis and conclude that the earnings estimates are not
signi cantly di erent from reported earnings.

Question #70 of 97 Question ID: 1204427

Student's t-Distribution

Level of Signi cance for One-Tailed Test

df 0.100 0.050 0.025 0.01 0.005 0.0005

Level of Signi cance for Two-Tailed Test

df 0.20 0.10 0.05 0.02 0.01 0.001

10 1.372 1.812 2.228 2.764 3.169 4.587

11 1.363 1.796 2.201 2.718 3.106 4.437

12 1.356 1.782 2.179 2.681 3.055 4.318

22 1.321 1.717 2.074 2.508 2.819 3.792

23 1.319 1.714 2.069 2.500 2.807 3.768

24 1.318 1.711 2.064 2.492 2.797 3.745

Roy Fisher, CFA, wants to determine whether there is a signi cant di erence, at the 5% signi cance level,

between the mean monthly return on Stock GHI and the mean monthly return on Stock JKL. Fisher assumes
the variances of the two stocks' returns are equal. Using the last 12 months of returns on each stock, Fisher

calculates a t-statistic of 2.0 for a test of equality of means. Based on this result, Fisher's test:

A) rejects the null hypothesis, and Fisher can conclude that the means are equal.

B) fails to reject the null hypothesis.

C) rejects the null hypothesis, and Fisher can conclude that the means are not equal.

Question #71 of 97 Question ID: 1204391

For a two-tailed test of hypothesis involving a z-distributed test statistic and a 5% level of signi cance, a

calculated z-statistic of 1.5 indicates that:

A) the null hypothesis is rejected.

B) the null hypothesis cannot be rejected.

C) the test is inconclusive.

Question #72 of 97 Question ID: 1204403

A p-value of 0.02% means that a researcher:

A) can reject the null hypothesis at both the 5% and 1% signi cance levels.

B) can reject the null hypothesis at the 5% signi cance level but cannot reject at the 1% signi cance
level.

C) cannot reject the null hypothesis at either the 5% or 1% signi cance levels.
Question #73 of 97 Question ID: 1204412

Segment of the table of critical values for Student's t-distribution:

Level of Signi cance for a One-Tailed Test

df 0.050 0.025

Level of Signi cance for a Two-Tailed Test

df 0.10 0.05

16 1.746 2.120

17 1.740 2.110

18 1.734 2.101

19 1.729 2.093

Simone Mak is a television network advertising executive. One of her responsibilities is selling commercial
spots for a successful weekly sitcom. If the average share of viewers for this season exceeds 8.5%, she can

raise the advertising rates by 50% for the next season. The population of viewer shares is normally

distributed. A sample of the past 18 episodes results in a mean share of 9.6% with a standard deviation of
10.0%. If Mak is willing to make a Type 1 error with a 5% probability, which of the following statements is

most accurate?

A) With an unknown population variance and a small sample size, Mak cannot test a hypothesis based
on her sample data.

B) Mak cannot charge a higher rate next season for advertising spots based on this sample.

C) The null hypothesis Mak needs to test is that the mean share of viewers is greater than 8.5%.

Question #74 of 97 Question ID: 1204384

John Jenkins, CFA, is performing a study on the behavior of the mean P/E ratio for a sample of small-cap
companies. Which of the following statements is most accurate?

A) One minus the con dence level of the test represents the probability of making a Type II error.

B) The signi cance level of the test represents the probability of making a Type I error.

C) A Type I error represents the failure to reject the null hypothesis when it is, in truth, false.

Question #75 of 97 Question ID: 1204410

Student's t-Distribution

Level of Signi cance for One-Tailed Test

df 0.100 0.050 0.025 0.01 0.005 0.0005

Level of Signi cance for Two-Tailed Test

df 0.20 0.10 0.05 0.02 0.01 0.001

18 1.330 1.734 2.101 2.552 2.878 3.922

19 1.328 1.729 2.093 2.539 2.861 3.883

20 1.325 1.725 2.086 2.528 2.845 3.850

21 1.323 1.721 2.080 2.518 2.831 3.819

In a two-tailed test of a hypothesis concerning whether a population mean is zero, Jack Olson computes a t-
statistic of 2.7 based on a sample of 20 observations where the distribution is normal. If a 5% signi cance

level is chosen, Olson should:

A) fail to reject the null hypothesis that the population mean is not signi cantly di erent from zero.

B) reject the null hypothesis and conclude that the population mean is not signi cantly di erent from
zero.

C) reject the null hypothesis and conclude that the population mean is signi cantly di erent from zero.

Question #76 of 97 Question ID: 1204362

Which one of the following is the most appropriate set of hypotheses to use when a researcher is trying to
demonstrate that a return is greater than the risk-free rate? The null hypothesis is framed as a:

A) greater than statement and the alternative hypothesis is framed as a less than or equal to
statement.

B) less than or equal to statement and the alternative hypothesis is framed as a greater than
statement.

C) less than statement and the alternative hypothesis is framed as a greater than or equal to
statement.

Question #77 of 97 Question ID: 1204402

A researcher determines that the mean annual return over the last 10 years for an investment strategy was

greater than that of an index portfolio of equal risk with a statistical signi cance level of 1%. To determine
whether the abnormal portfolio returns to the strategy are economically meaningful, it would be most

appropriate to additionally account for:

A) only the transaction costs and tax e ects of the strategy.

B) the transaction costs, tax e ects, and risk of the strategy.

C) only the transaction costs of the strategy.

Question #78 of 97 Question ID: 1204445

Student's t-distribution, level of signi cance for a two-tailed test:

df 0.20 0.10 0.05 0.02 0.01 0.001

16 1.337 1.746 2.120 2.583 2.921 4.015

17 1.333 1.740 2.110 2.567 2.898 3.965

18 1.330 1.734 2.101 2.552 2.878 3.922

19 1.328 1.729 2.093 2.539 2.861 3.883

20 1.325 1.725 2.086 2.528 2.845 3.850

Based on a sample correlation coe cient of −0.525 from a sample size of 19, an analyst calculates a t-
−−−−
−0.525√19−2
statistic of −−−−−−−−−− = −2.5433. The analyst can reject the hypothesis that the population
2
√1−(−0.525)

correlation coe cient equals zero:

A) at a 1% signi cance level.

B) at a 2% signi cance level, but not at a 1% signi cance level.

C) at a 5% signi cance level, but not at a 2% signi cance level.

Question #79 of 97 Question ID: 1204432

Joe Sutton is evaluating the e ects of the 1987 market decline on the volume of trading. Speci cally, he

wants to test whether the decline a ected trading volume. He selected a sample of 500 companies and

collected data on the total annual volume for one year prior to the decline and for one year following the
decline. What is the set of hypotheses that Sutton is testing?

A) H0: µd ≠ µd0 versus Ha: µd = µd0.

B) H0: µd = µd0 versus Ha: µd > µd0.

C) H0: µd = µd0 versus Ha: µd ≠ µd0.

Question #80 of 97 Question ID: 1204438

Which of the following statements about the variance of a normally distributed population is least accurate?

A) The Chi-squared distribution is a symmetric distribution.

B) The test of whether the population variance equals σ02 requires the use of a Chi-squared distributed

test statistic, [(n − 1)s2] / σ02.

C) A test of whether the variance of a normally distributed population is equal to some value σ 2, the
0

hypotheses are: H0: σ2 = σ02, versus Ha: σ2 ≠ σ02.

Question #81 of 97 Question ID: 1204413

Student's t-Distribution

Level of Signi cance for One-Tailed Test

df 0.100 0.050 0.025 0.01 0.005 0.0005

Level of Signi cance for Two-Tailed Test

df 0.20 0.10 0.05 0.02 0.01 0.001

40 1.303 1.684 2.021 2.423 2.704 3.551

Ken Wallace is interested in testing whether the average price to earnings (P/E) of rms in the retail industry

is 25. Using a t-distributed test statistic and a 5% level of signi cance, the critical values for a sample of 41

rms is (are):

A) -1.685 and 1.685.

B) -1.96 and 1.96.

C) -2.021 and 2.021.

Question #82 of 97 Question ID: 1204377

A survey is taken to determine whether the average starting salaries of CFA charterholders is equal to or

greater than $58,500 per year. What is the test statistic given a sample of 175 newly acquired CFA

charterholders with a mean starting salary of $67,000 and a standard deviation of $5,200?

A) 1.63.

B) -1.63.

C) 21.62.

Question #83 of 97 Question ID: 1204434

In order to test if Stock A is more volatile than Stock B, prices of both stocks are observed to construct the

sample variance of the two stocks. The appropriate test statistics to carry out the test is the:
A) F test.

B) t test.

C) Chi-square test.

Question #84 of 97 Question ID: 1204395

If the null hypothesis is innocence, then the statement "It is better that the guilty go free, than the innocent

are punished" is an example of preferring a:

A) higher level of signi cance.

B) type II error over a type I error.

C) type I error over a type II error.

Question #85 of 97 Question ID: 1204381

Which of the following statements regarding hypothesis testing is least accurate?

A) A type I error is acceptance of a hypothesis that is actually false.

B) A type II error is the acceptance of a hypothesis that is actually false.

C) The signi cance level is the risk of making a type I error.

Question #86 of 97 Question ID: 1204447

Which of the following statements about parametric and nonparametric tests is least accurate?

A) Nonparametric tests rely on population parameters.

B) The test of the mean of the di erences is used when performing a paired comparison.

C) The test of the di erence in means is used when you are comparing means from two independent
samples.

Question #87 of 97 Question ID: 1204353

If the null hypothesis is H0: ρ ≤ 0, what is the appropriate alternative hypothesis?

A) Ha: ρ < 0.

B) Ha: ρ > 0.
C) Ha: ρ ≠ 0.

Question #88 of 97 Question ID: 1204433

An analyst has calculated the sample variances for two random samples from independent normally

distributed populations. The test statistic for the hypothesis that the true population variances are equal is

a(n):

A) F-statistic.

B) t-statistic.

C) chi square statistic.

Question #89 of 97 Question ID: 1204423

An analyst is testing to see if the mean of a population is less than 133. A random sample of 50 observations

had a mean of 130. Assume a standard deviation of 5. The test is to be made at the 1% level of signi cance.
The analyst should:

A) reject the null hypothesis.

B) fail to reject the null hypothesis.

C) accept the null hypothesis.

Question #90 of 97 Question ID: 1204424

An analyst conducts a two-tailed z-test to determine if small cap returns are signi cantly di erent from 10%.
The sample size was 200. The computed z-statistic is 2.3. Using a 5% level of signi cance, which statement is

most accurate?

A) Reject the null hypothesis and conclude that small cap returns are signi cantly di erent from 10%.

B) You cannot determine what to do with the information given.

C) Fail to reject the null hypothesis and conclude that small cap returns are close enough to 10% that
we cannot say they are signi cantly di erent from 10%.

Question #91 of 97 Question ID: 1204411

Which of the following statements about testing a hypothesis using a Z-test is least accurate?
A) If the calculated Z-statistic lies outside the critical Z-statistic range, the null hypothesis can be
rejected.

B) The calculated Z-statistic determines the appropriate signi cance level to use.

C) The con dence interval for a two-tailed test of a population mean at the 5% level of signi cance is
that the sample mean falls between ±1.96 σ/√n of the null hypothesis value.

Question #92 of 97 Question ID: 1204448

A test of whether a mutual fund's performance rank in one period provides information about the fund's

performance rank in a subsequent period is best described as a:

A) parametric test.

B) nonparametric test.

C) mean-rank test.

Question #93 of 97 Question ID: 1204444

To test a hypothesis that the population correlation coe cient of two variables is equal to zero, an analyst

collects a sample of 24 observations and calculates a sample correlation coe cient of 0.37. Can the analyst
test this hypothesis using only these two inputs?

A) Yes.

B) No, because the sample standard deviations of the two variables are also required.

C) No, because the sample means of the two variables are also required.

Question #94 of 97 Question ID: 1204378

A survey is taken to determine whether the average starting salaries of CFA charterholders is equal to or

greater than $59,000 per year. What is the test statistic given a sample of 135 newly acquired CFA
charterholders with a mean starting salary of $64,000 and a standard deviation of $5,500?

A) 10.56.

B) -10.56.

C) 0.91.

Question #95 of 97 Question ID: 1204375

Identify the error type associated with the level of signi cance and the meaning of a 5 percent signi cance
level.

α = 0.05 means there is a 5 percent

Error type
probability of

A) Type I error failing to reject a true null hypothesis

B) Type II error rejecting a true null hypothesis

C) Type I error rejecting a true null hypothesis

Question #96 of 97 Question ID: 1204365

Jill Woodall believes that the average return on equity in the retail industry, µ, is less than 15%. What are the

null (H0) and alternative (Ha) hypotheses for her study?

A) H0: µ ≥ 0.15 versus Ha: µ < 0.15.

B) H0: µ ≤ 0.15 versus Ha: µ > 0.15.

C) H0: µ < 0.15 versus Ha: µ ≥ 0.15.

Question #97 of 97 Question ID: 1204393

The power of the test is:

A) the probability of rejecting a false null hypothesis.

B) the probability of rejecting a true null hypothesis.

C) equal to the level of con dence.