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CFA Level 1
Quantitative Methods

Understanding Type I and II Errors in Hypothesis Testing

Very Easy Hypothesis Testing Type I And Ii Errors

In hypothesis testing, various types of errors may occur when evaluating the validity of the null hypothesis. A Type I error occurs when the null hypothesis is incorrectly rejected, while a Type II error occurs when the null hypothesis fails to be rejected even though it is false.

Consider the following statements regarding Type I and Type II errors:

Which of the following statements is TRUE?

Hint

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