Hypothesis Testing

Question 1

A _____ is a statement about the value of a population parameter developed for the purpose of testing a theory or belief.

Answer 1

Hypothesis

Question 2

The _____ hypothesis is the hypothesis that the researcher wants to reject.

Answer 2

Null

Question 3

The _____ hypothesis is the hypothesis that always includes the “equal to” condition

Answer 3

Null

Question 4

The _____ hypothesis is what is concluded if there is sufficient evidence to reject the null hypothesis.

Answer 4

Alternative

Question 5

A _____ is calculated by comparing the point estimate of the population parameter with the hypothesized value of the parameter (i.e., the value specified in the null hypothesis).

Answer 5

Test statistic

Question 6

Formula: Test statistic

Answer 6

Question 7

A type _____ error means the rejection of the null hypothesis when it is actually true.

Answer 7

Type I

Question 8

A type _____ error means the failure to reject the null hypothesis when it is actually false.

Answer 8

Type II

Question 9

The significance level (α) is the probability of making a Type _____ error

Answer 9

Type I

Question 10

The power of a test is the probability of correctly _____.

Answer 10

Rejecting the null hypothesis when it is false

Question 11

The power of a test equals 1 - _____.

Answer 11

Probability of making a Type II error

Question 12

Decreasing the significance level (probability of a Type I error) will _____the probability of failing to reject a false null (Type II error) and therefore _____ the power of the test.

Answer 12

Increase, decrease

Question 13

Statistical significance does not necessarily imply economic significance. Name three (3) important considerations.

Answer 13

Transaction cost, taxes, risk

Question 14

In hypothesis testing, the _____ is the probability of obtaining a test statistic that would lead to a rejection of the null hypothesis, assuming the null hypothesis is true.

Answer 14

P-value

Question 15

The p-value is the _____ level of significance for which the null hypothesis can be rejected.

Answer 15

Smallest

Question 16

We need to use adjusted significance is we get _____ test statistics with p-values that are less than the significance level than we should get.

Answer 16

More

Question 17

When using adjusted significance, after ranking found p-values in order and calculating adjusted p-values for each of the p-values that are _____ than the significance level, we should only reject those with adjusted significance based on p-value rank that are _____than or equal to their reported p-values.

Answer 17

Less, greater

Question 18

Formula: Adjusted significance

Answer 18

Question 19

In hypothesis testing, the t-test should be used if the population variance is _____, the sample size is _____, or if the sample size is _____ but the distribution of the population is normal or approximately normal.

Answer 19

Unknown, more than 30, less than 30

Question 20

In hypothesis testing, the z-test should be used if the population variance is _____ and the population is _____ distributed. It can also be exceptionally used if the population variance is _____ and we have a _____ sample.

Answer 20

Known, normally, unknown, large.