METHODS OF DATA ANALYSIS
DECISION MAKING WITH HYPOTHESIS TESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -A z-score value in the critical region means that you should reject the null hypothesis. (True or False?) True. A z-score value in the critical region means that the sample is not consistent with the null hypothesis.
Detailed explanation-2: -If the value of z is greater than 1.96 or less than-1.96, the null hypothesis is rejected. The value for z is calculated by subtracting the value of the average daily return selected for the test, or 1% in this case, from the observed average of the samples.
Detailed explanation-3: -A sample mean with a z-score less than or equal to the critical value of-1.645 is significant at the 0.05 level. There is 0.05 to the left of the critical value. Any z-score to the left of-1.645 will be rejected. This zone (shown in green here) is called the Rejection Region.
Detailed explanation-4: -➢ To determine the critical region for a normal distribution, we use the table for the standard normal distribution. If the level of significance is = 0.10, then for a one tailed test the critical region is below z =-1.28 or above z = 1.28.