Type I Error
A type of error that occurs when a null hypothesis is rejected although it is true. The error accepts the alternative hypothesis, despite it being attributed to chance.
Also referred to as a "false positive". Investopedia Says:
Type I error rejects an idea that should have been accepted. It also claims that two observances are different, when they are actually the same.
For example, let's look at the trail of an accused criminal. The null hypothesis is that the person is innocent, while the alternative is guilty. A Type I error in this case would mean that the person is found guilty and is sent to jail, despite actually being innocent. Related Terms:
Mean
Monte Carlo Simulation
Quantitative Analysis
Standard Deviation
Technical Analysis
Type II Error |