CFA Level 1: Acceptance Area for Two-Tailed Test

Acceptance Area

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Question

If alpha = .05 for a two-tailed test, how large is the acceptance area?

Answers

Explanations

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A. B. C. D. E.

C

The acceptance region is the area in between the two critical values. In this case it is 1 - 0.05 = 0.95.

The acceptance area in hypothesis testing refers to the range of values within which we fail to reject the null hypothesis. In this case, the question asks for the size of the acceptance area given an alpha level of 0.05 for a two-tailed test.

In hypothesis testing, the null hypothesis (H0) represents the assumption that there is no significant difference or relationship between variables, while the alternative hypothesis (H1) suggests that there is a significant difference or relationship.

For a two-tailed test, the critical region is divided equally into two tails. Each tail represents the extreme ends of the distribution, and the alpha level is split between the two tails. Since the question states that alpha = 0.05, this means that each tail will have an alpha level of 0.025.

To determine the acceptance area, we need to find the area outside the critical region. In this case, the critical region consists of both tails, each with an alpha level of 0.025. The acceptance area is the remaining area outside the critical region.

Since the critical region represents the tails of the distribution and we have an alpha level of 0.05, the acceptance area will be equal to 1 minus the alpha level. Therefore, the acceptance area is 1 - 0.05 = 0.95.

In the answer choices provided, the option that represents the acceptance area of 0.95 is option C. So, the correct answer is C. .950.