Sign up  |  Log in

Level of significance vs level of confidence vs confidence interval

Just came across this one question asking what 1 - alpha represents?

A Level of significance
B Confidence interval
C Level of confidence

very straight but as it seemed to be an easy question, as soon as I saw B I selected B and didnt even read C.

Now I am confused answer is C. I dont have issue undertsanding why C is the right answer but rather I d like to know what the difference between B and C is. 1 - alpha isnt it also the confidence interval. Are they not the same thing.

ex: Alpha=5% ==> 1- alpha = 95% level of confidence is 95% but so is the confidence interval equivalent to 95% or 1 - alpha.

I mean it is not a big deal since I was so suprised that if I have the same question I will remember but still thought it would be interesting to clear my brain out.


Drill all the fundamentals with Wiley's CFA experts Peter Olinto, Darren Degraaf and others.

The confidence interval is the actual numerical interval….like 50 +/- 2.5 or something like that. Think of the confidence interval as the bookends of the “fail to reject null” portion.

The level of confidence is the % term.

so the confidence interval lets say is -1.96 to 1.96 (5% level of significance). This would be the right answer and the fact that it is equivalent to 95% is just a characteristic ofthe interval or in other word the level of confidence for the interval -1.96 to 1.96 is 95%.

Thx man

Confidence interval would be sample mean ± 1.96 * std.error. (The actual numerical values).