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CFA Level 1
Quantitative Methods

Understanding Null and Alternative Hypotheses

Very Easy Hypothesis Testing Null And Alternative Hypotheses

In hypothesis testing, researchers formulate two opposing statements about a population parameter. The first statement, known as the null hypothesis (H0), represents the idea that there is no effect or no difference. The second statement, called the alternative hypothesis (H1), indicates that there is an effect or a difference.

Consider the situation where a manufacturer claims that their batteries last an average of 120 hours. A consumer rights group believes instead that the average lifetime of the batteries is less than this claimed value. In this context, what is the correct formulation of the null and alternative hypotheses?

Hint

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