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Test Prep CFA-Level-I Exam Questions
CFA® Level I Chartered Financial Analyst (Page 98 )

Updated On: 24-Feb-2026
Page 98 of 793
PDF with 3963 Questions

If the hypothesized value of a parameter under the null hypothesis lies outside the confidence interval, the null hypothesis:

  1. none of these answers.
  2. cannot be rejected at the corresponding significance level.
  3. should be rejected at the corresponding significance level.
  4. is ill-specified.

Answer(s): C

Explanation:

The confidence interval specifies the range over which the true value of the estimated parameter can lie without rejecting the null hypothesis at the given level of significance.



What sample statistic is used to estimate a population value?

  1. None of these answers
  2. Point estimate
  3. Parameter
  4. Interval estimate
  5. Sampling error

Answer(s): B

Explanation:

The point estimate is the estimate of a particular value in the population.



What is the area under the normal curve for z > 1.79?

  1. None of these answers
  2. 0.4633
  3. 0.0401
  4. 0.9599
  5. 0.0367

Answer(s): E

Explanation:

From the z-tables, z = 1.79 is 0.4633. So 1 - 0.4633*2 = 0.0734. Since it is on each side of the curve, 0.0734/2 = 0.0367.



What does it mean if r = -1.00?

  1. High values of one variable are associated with low values of the other variable
  2. Dependent variable can be perfectly predicted by the independent variable
  3. All of the variation in the dependent variable can be accounted for by the independent variable
  4. Coefficient of nondetermination equals zero
  5. All of these answers are correct

Answer(s): E

Explanation:

All the above are properties or explanations of the coefficient of correlation being equal to -1.0.



Type I error refers to the event that we will:

  1. Accept the alternative when it is true.
  2. none of these answers.
  3. Reject the null when it is true.
  4. Fail to reject the null when it is false.
  5. Reject the alternative when it is true.

Answer(s): C

Explanation:

Remember that the null hypothesis is the one that you maintain to be true unless there is sufficient evidence to prove otherwise. Therefore, the first type of mistake that can happen is that you reject the maintained hypothesis when in fact, it is true. This error is referred to as "Type I" error. On the other hand, you may not have sufficient evidence to disprove the null when in fact, it is false. This failure to appropriately reject the null is referred to as "Type II" error.






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