Hypothesis Testing Flashcards
A _____ is a statement about the value of a population parameter developed for the purpose of testing a theory or belief.
Hypothesis
The _____ hypothesis is the hypothesis that the researcher wants to reject.
Null
The _____ hypothesis is the hypothesis that always includes the “equal to” condition
Null
The _____ hypothesis is what is concluded if there is sufficient evidence to reject the null hypothesis.
Alternative
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).
Test statistic
Formula: Test statistic
A type _____ error means the rejection of the null hypothesis when it is actually true.
Type I
A type _____ error means the failure to reject the null hypothesis when it is actually false.
Type II
The significance level (α) is the probability of making a Type _____ error
Type I
The power of a test is the probability of correctly _____.
Rejecting the null hypothesis when it is false
The power of a test equals 1 - _____.
Probability of making a Type II error
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.
Increase, decrease
Statistical significance does not necessarily imply economic significance. Name three (3) important considerations.
Transaction cost, taxes, risk
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.
P-value
The p-value is the _____ level of significance for which the null hypothesis can be rejected.
Smallest
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.
More
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.
Less, greater
Formula: Adjusted significance
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.
Unknown, more than 30, less than 30
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.
Known, normally, unknown, large.
