Is this a correct approach

CFA Level I Quant
#1

Hey everyone,

Question :

A researcher is testing the hypothesis that a population mean is equal to zero. From a sample with 64 observations, the researcher calculates a sample mean of -2.5 and a sample standard deviation of 8.0. At which levels of significance should the researcher reject the hypothesis?

1% significance / 5% significance / 10% significance

A) Fail to reject / Reject / Reject

B) Reject / Fail to reject / Fail to reject

C) Fail to reject / Fail to reject / Reject

Since i was kinda lazy to find the critival value of each level of significance. I infered the p-value from the Test statistic (T-statistic = -2,5 / p-value = 0,0062*2 = 0,012) and compared it to each significance level to decide if i should reject or not the null.

P-value is the smallest significant level at which we can reject the null, so:
0,012 < 0,10, i can reject the null for a significance level of 10%
0,012 < 0,05 i can reject the null for a significance level of 5%
0,012 > 0,01 i cannot reject the null for a significance level of 1%

Is my approach safe and correct?

Just wanna make sure i don’t pick up a bad habit and make an error in the future with questions like these.

The actual answer provided compares the t-statistic with critical values of each significance level.

Regards.

#2

I get p = −0.0150.

Your approach is valid, but it appears that your calculation is off slightly.

#3

Hi S2000magician. Thanks for confirming.

Typo from my end, i wrote T-statistic while working with a Z-statistic, which explains our differences.

Both statistics give the same results though.

Regards.

#4

Fortunately.

When I write practice questions for which it is likely that some candidates will use the wrong formula, I try to ensure that using the wrong formula will lead to choosing the wrong answer.

That keeps it interesting for, at least, me.

#5

Thanks for the reminder dear magician. I’ll keep this trap in mind and will make sure to avoid it.