Financial Risk Manager Part 1

Explanation

The p-value is the probability of obtaining results at least as extreme as the observed results of a hypothesis test, assuming that the null hypothesis is correct. In other words, the p-value is the lowest level at which we can reject the null hypothesis.

Key Points:

• At a 95% confidence level, the significance level (α) is 5% (1 - 95% = 5%)
• The p-value of 2.14% is less than the 5% significance level
• Decision Rule: If p-value ≤ α, reject the null hypothesis

Analysis:

• p-value (2.14%) < α (5%) → Reject the null hypothesis
• Option A is incorrect because we CAN reject the null hypothesis at 5% significance
• Option B is incorrect because while we can reject at 2% significance, this is not the main conclusion from the given information
• Option D is incorrect because we have sufficient information to make a conclusion
• Option C is correct because at the 5% significance level (which corresponds to the 95% confidence level), we can reject the null hypothesis

Therefore, the correct answer is C.