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

Question of the Week: Level 1 – Quantitative Methods

  • Author
    Posts
    • Avatar of MarkMeldrumMarkMeldrum
      Participant
        • Undecided
        Up
        38
        ::

        Which is a false statement?

        • A. The probability of a Type 1 error is given by α.
        • B. The probability of a Type 2 error is given by 1 – α.
        • C. The only way to reduce the probability of both Type 1 and Type 2 errors
          simultaneously is to increase the sample size.
      • Avatar of MarkMeldrumMarkMeldrum
        Participant
          • Undecided
          Up
          3
          ::

          The correct answer is Option B.

          The probability of a Type I error in testing a hypothesis is denoted by the Greek letter alpha, α.

          The probability of a Type 2 error in testing a hypothesis is denoted by the Greek letter beta, β.

          Option Β is difficult to quantify and it does not = 1 – α.

          Finally, with respect to Option C, the only way to reduce the probabilities of both types of errors simultaneously is to increase the sample size, n.

      Viewing 1 reply thread
      • You must be logged in to reply to this topic.