Question #1 of 34 Question ID: 1572880

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

A) Nonparametric tests rely on population parameters.

The test of the difference in means is used when you are comparing means from
B)
two independent samples.
The test of the mean of the differences is used when performing a paired
C)
comparison.

Question #2 of 34 Question ID: 1572868

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) 19.99.
C) 2.31.

Question #3 of 34 Question ID: 1572881

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) mean-rank test.
B) nonparametric test.
C) parametric test.
Question #4 of 34 Question ID: 1572873

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

Question #5 of 34 Question ID: 1572876

If an analyst wants to perform hypothesis testing using a chi-square test, which of the
following values is he most likely assessing?

A) The value of a population mean.

B) The value of a population variance.
C) Whether two population variances are equal.

Question #6 of 34 Question ID: 1572857

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

A Type I error is the probability of rejecting the null hypothesis when the null
A)
hypothesis is false.
B) The significance level is the probability of making a Type I error.
C) A Type II error is the probability of failing to reject a null hypothesis that is not true.

Question #7 of 34 Question ID: 1572870

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) 0.91.
B) 10.56.
C) -10.56.

Question #8 of 34 Question ID: 1572867

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 #9 of 34 Question ID: 1572861

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:

A) the probability of a Type I error is 2.5%.

B) the power of the test is 95%.
C) the confidence level of the test is 95%.

Question #10 of 34 Question ID: 1572851

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) power of the test is 95%.
B) significance level of the test is 5%.
C) probability of a Type I error is 2.5%.

Question #11 of 34 Question ID: 1572879

Lucy James, CFA, is constructing a hypothesis test using a 5% level of significance. If she is
interested in increasing the "power of the test," she should consider:

A) lowering the level of significance.

B) keeping the significance level the same and increasing the sample size.
C) increasing the probability of a Type II error.

Question #12 of 34 Question ID: 1572849

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

A) incorrectly accepting the null decreases.

B) incorrectly rejecting the null increases.
C) a Type II error increases.

Question #13 of 34 Question ID: 1572848

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

A Type I error is rejecting the null hypothesis when it is true, and a Type II error is
A)
rejecting the alternative hypothesis when it is true.
A hypothesis that the population mean is less than or equal to 5 should be rejected
B)
when the critical Z-statistic is greater than the sample Z-statistic.
A hypothesized mean of 3, a sample mean of 6, and a standard error of the
C)
sampling means of 2 give a sample Z-statistic of 1.5.
Question #14 of 34 Question ID: 1572863

The power of the test is:

A) the probability of rejecting a true null hypothesis.

B) equal to the level of confidence.
C) the probability of rejecting a false null hypothesis.

Question #15 of 34 Question ID: 1572860

If a one-tailed z-test uses a 5% significance level, the test will reject a:

A) true null hypothesis 95% of the time.

B) true null hypothesis 5% of the time.
C) false null hypothesis 95% of the time.

Question #16 of 34 Question ID: 1572852

A Type I error is made when the researcher:

A) rejects the null hypothesis when it is actually true.

B) rejects the alternative hypothesis when it is actually true.
C) fails to reject the null hypothesis when it is actually false.

Question #17 of 34 Question ID: 1572862

An analyst decides to select 10 stocks for her portfolio by placing the ticker symbols for all
the stocks traded on the New York Stock Exchange in a large bowl. She randomly selects 20
stocks and will put every other one chosen into her 10-stock portfolio. The analyst used:

A) stratified random sampling.

B) simple random sampling.
C) dual random sampling.

Question #18 of 34 Question ID: 1572853

A Type I error:

A) fails to reject a false null hypothesis.

B) rejects a true null hypothesis.
C) rejects a false null hypothesis.

Question #19 of 34 Question ID: 1572877

A financial analyst is constructing a hypothesis test to assess whether the mean daily return
on a portfolio of blue-chip stocks is statistically different from zero. The sample size is 128
trading days, the mean return is 0.14%, and the standard deviation is 0.18%. With the null
hypothesis that the daily portfolio return is equal to zero, which of the following changes in
variables will independently make it more likely that the null is rejected?

A) An increase in the standard deviation of the returns to 0.23%.

B) A move of the mean return down to 0.11%.
C) An increase in the sample size to 140.

Question #20 of 34 Question ID: 1572869

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
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 #21 of 34 Question ID: 1572854

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

A) The significance level is the risk of making a type I error.

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

Question #22 of 34 Question ID: 1572865

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 significantly different from 7 at the 5% level of significance. Which of the
following statements is least accurate?:

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

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

The mean observation is significantly different from 7, because the calculated Z-

C)
statistic is less than the critical Z-statistic.

Question #23 of 34 Question ID: 1572878

Bo Rigley, CFA, is a financial analyst examining large-cap equity returns over a calendar year.
His sample size is 252 trading days, and he observes a mean return of 0.07% and a standard
deviation of 0.12%. With his null hypothesis that the daily portfolio return is equal to zero
and a 10% level of significance, Rigley will:

A) reject the null because the test statistic is greater than the critical value.
B) not reject the null because the test statistic is less than the critical value.
C) not reject the null because the test statistic is greater than the critical value.
Question #24 of 34 Question ID: 1572858

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 #25 of 34 Question ID: 1572874

For a hypothesis test regarding a population parameter, an analyst has determined that the
probability of failing to reject a false null hypothesis is 18%, and the probability of rejecting a
true null hypothesis is 5%. The power of the test is:

A) 0.95.
B) 0.18.
C) 0.82.

Question #26 of 34 Question ID: 1572859

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

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

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

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

Question #27 of 34 Question ID: 1572864

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

A) The probability of a Type I error is equal to the significance level of the test.
B) The power of a test is one minus the probability of a Type I error.
 If you can disprove the null hypothesis, then you have proven the alternative
C)
hypothesis.

Question #28 of 34 Question ID: 1572871

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 fishing 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 fish is significantly
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 II error only.
C) a Type I error only.

Question #29 of 34 Question ID: 1572855

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 #30 of 34 Question ID: 1572875

A data analyst compares the P/E ratios for two companies over a period of 20 years and
calculates a two-tailed F-statistic that exceeds the critical F-statistic value. As a result of her
findings, she will:

not reject the null hypothesis that the P/E ratio variances between the two
A)
companies are significantly different.
 reject the null hypothesis that the P/E ratio variances between the two companies
B)
are significantly different.
reject the null hypothesis that the P/E ratio variances between the two companies
C)
are not significantly different.

Question #31 of 34 Question ID: 1572856

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 Type I error represents the failure to reject the null hypothesis when it is, in fact,
A)
false.
One minus the confidence level of the test represents the probability of making a
B)
Type II error.
C) The significance level of the test represents the probability of making a Type I error.

Question #32 of 34 Question ID: 1572850

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 #33 of 34 Question ID: 1572866

A researcher is testing whether the average age of employees in a large firm is statistically
different 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) indicates that the researcher will reject the null hypothesis.
B) has a significance level of 95%.
indicates that the researcher is 95% confident that the average employee age is
C)
different than 35 years.

Question #34 of 34 Question ID: 1572872

For a two-tailed test of hypothesis involving a z-distributed test statistic and a 5% level of
significance, a calculated z-statistic of 1.5 indicates that:

A) the null hypothesis cannot be rejected.

B) the test is inconclusive.
C) the null hypothesis is rejected.