Hypothesis Test of Population Correlation | CFA® Level 1

If the Decision is to Reject the Null Hypothesis

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Question

If the decision in the hypothesis test of the population correlation is to reject the null hypothesis, what can we conclude about the population correlation?

Answers

Explanations

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A. B. C. D. E.

Explanation

The Ho is always stated as Ho: Population parameter=0. So if we reject Ho, we say that it is not zero.

In hypothesis testing, the population correlation refers to the correlation coefficient between two variables in the entire population. The null hypothesis assumes that there is no correlation between the variables in the population (i.e., the population correlation is zero), while the alternative hypothesis suggests that there is a non-zero correlation.

If the decision in the hypothesis test of the population correlation is to reject the null hypothesis, it means that there is sufficient evidence to suggest that the population correlation is indeed different from zero. In other words, we can conclude that the population correlation is not zero.

Therefore, the correct answer is B. "Is not zero."

Option A, "None of these answers is correct," is incorrect because if we reject the null hypothesis, we can make a conclusion about the population correlation.

Option C, "Equals the computed sample correlation," is incorrect because the hypothesis test deals with the population correlation, not the sample correlation. The sample correlation is calculated from a sample, which may or may not accurately represent the population correlation.

Option D, "Is zero," is incorrect because rejecting the null hypothesis indicates that the population correlation is not zero.

Option E, "Could be zero," is incorrect because if the null hypothesis is rejected, it means the population correlation is not zero.