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CFA Level 1
Quantitative Methods

Identifying Type I and Type II Errors in Hypothesis Testing

Easy Hypothesis Testing Type I And Ii Errors

A company wants to test whether its new marketing strategy has increased sales compared to last year. The null hypothesis ($H_0$) states that there is no difference in sales, while the alternative hypothesis ($H_1$) states that the new marketing strategy has increased sales. If the company incorrectly rejects the null hypothesis when it is actually true, what type of error have they committed?

Hint

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