CFA Level 1: Test Statistic Value for No Type I Error

The Critical Value and Test Statistic Relationship

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Question

If the critical value for a test statistic equals 2.45, what value of the test statistic would guarantee no chance of making a Type I error?

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Explanations

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A. B. C. D. E.

C

The type I error is rejecting the null hypothesis when it is actually true. So if we accept the null hypothesis, there is no possibility of committing the type I error.

Therefore, we can only accept the null if our test statistic falls inside the acceptance region between -2.45 and +2.45.