CFA Level I · CFA Level I Exam · Estimation and Hypothesis Testing
A researcher tests H0: μ = 0 against Ha: μ ≠ 0 at the 5% significance level and obtains a p-value of 0.03. The researcher's conclusion is most likely to:
The researcher would reject the null hypothesis because the p-value of 0.03 is smaller than the 5% significance level. The p-value is not the probability that the null is true, so the third reasoning is wrong.
- Afail to reject the null hypothesis because 0.03 is less than 0.05
- Breject the null hypothesis because the p-value is below the significance levelCorrect
- Creject the null hypothesis because there is a 3% chance the null is true
Explanation
A p-value is the smallest significance level at which the null can be rejected. Since 0.03 is below 0.05, the null is rejected. The p-value is not the probability that the null is true; it is the probability of results at least as extreme as observed if the null is true.
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