Free CFA I Exam Braindumps
CFA Level I Chartered Financial Analyst Questions 1171–1175 (page: 236)

Updated On: 9-Feb-2026

What do we call the conditions under which the null hypothesis is not rejected?

  1. Critical value
  2. Decision rule
  3. Alternate hypothesis
  4. None of these answers
  5. Test statistic

Answer(s): B

Explanation:

The decision rule lays out the conditions under which we may compare the z values and decide whether or not to reject the hypothesis.



If the alternative hypothesis states that u(Mu) > 6,700, what is the rejection region for the hypothesis test?

  1. Center
  2. None of these answers
  3. Lower tails
  4. Upper tail
  5. Both tails

Answer(s): D

Explanation:

Since the alternative is that Mu is bigger than the mean, then it will be located at the upper tail.



A light bulb manufacturer would like to supply only those bulbs which have a life of 2,000 hours or more. Otherwise, it wants the bulbs to be rejected at the assembly line. The statistician hired by the bulb manufacturer is trying to frame the situation as a hypothesis testing problem. He should specify the null and alternate hypothesis as:

  1. Ho: average life < 2,000; H1: average life > 2,000
  2. Ho: average life = 2,000; H1: average life > 2,000
  3. Ho: average life = 2,000; H1: average life < 2,000
  4. Ho: average life >= 2,000; H1: average life < 2,000

Answer(s): D

Explanation:

In any experiment, you have a natural candidate for a default hypothesis that is maintained to be true until there is sufficient evidence to reject it. This is the hypothesis that must be selected as the null. Inthe present example, the manufacturer is in the business of supplying bulbs which have an average life of more than 2000 hours. So it is logical to assume that the processes usually produce such bulbs and occasionally produce faulty bulbs which have a shorter average life. Hence, the null hypothesis must be that any given bulb has an average life of more than 2000 hours and the alternative hypothesis must be the complement (i.e. average life is less than 2000 hours).



The larger the critical value on the z-statistic,

  1. all of these answers can happen, depending on the R-square.
  2. the harder it is to reject the null hypothesis.
  3. the easier it is to accept the null hypothesis.
  4. the easier it is to reject the null hypothesis.
  5. none of these answers.

Answer(s): B

Explanation:

To reject a null hypothesis, the z-statistic must be larger in magnitude than the critical value for a given level of significance.



If a distribution is right skewed, which of the following is/are true?

  1. It cannot be normally distributed.
    II. Its skewness is negative.
    III. It has a positive mean.
    IV. Large positive deviations dominate large negative deviations.
  2. I only
  3. I & IV
  4. II only
  5. I & III
  6. III only
  7. I, II, III & IV

Answer(s): B

Explanation:

A normal distribution is symmetrical and hence, has zero skewness i.e. it is neither positively nor negatively skewed. If the distribution is right skewed, its skewness is positive but it does not necessarily have a positive mean.



Viewing page 236 of 793
Viewing questions 1176 - 1180 out of 3960 questions


Post your Comments and Discuss CFA CFA I exam prep with other Community members:

AI Tutor AI Tutor 👋 I’m here to help!