Which of the following statements relating to Tests of Hypothesis are correct ? Select the correct code.

Statement I: Type-I error occurs when true null hypothesis gets rejected by the test.

Statement II: Beta value denotes the power of the test.

Statement III : To test the significance of the goodness of fit of a distribution, F-test is applied.

Statement IV: When H₀: μ_M > μ_F, two-tailed test is applied for testing the hypothesis.

Statement V: The critical value of Z-statistic for two-tailed test at 5% level of significance is 1.96.

The correct answer is (1) I and

Key Points

Hypothesis testing involves determining whether or not differences between two sample distributions may simply be attributed to chance.

As it is probabilistic, there is always a potential that you could draw the wrong conclusions.

There are possibilities for having two types of error: type I and type II. 

1) Type 1 error: It occurs when true null hypothesis gets rejected.

2) Type 2 error: It occurs when false null hypothesis gets accepted.

● Where the region of rejection is on both sides of the sampling distribution, it is called a two-tailed test and where it is in one side of the sampling distribution, it is called one-tailed.

● Level of significance is the probability of rejecting the null hypothesis when it is true. The critical value of z statistic for two-tailed test at 5% level of significance is 1.96.

Hence, Statement I & V are correct and Statement II, III & IV are incorrect.