CFA Level 1: Hypothesis Testing | Mean Calculation | P-Value

Hypothesis Testing

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Question

A researcher has a sample of 400 observations from a population whose standard deviation is known to be 136. The mean of the sample is calculated to be 17.2.

The null hypothesis is stated as Ho: mean = 4. The p-value under the alternative hypothesis H1: mean > 4 equals ________.

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Explanations

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A. B. C. D.

D

The z-statistic under the null is calculated to be (17.2 - 4)/(136/(400^.5)) = 1.94. The right-tailed probability of observing a z-statistic at least as big as 1.94 equals

1.0 - 0.9738 = 0.026 = 2.6%. This is the p-value of the right-tailed test in this sample.