DEFINITION of 'Type II Error'
A statistical term used within the context of hypothesis testing that describes the error that occurs when one accepts a null hypothesis that is actually false. The error rejects the alternative hypothesis, even though it does not occur due to chance.
INVESTOPEDIA EXPLAINS 'Type II Error'
A type II error fails to reject (accepts) the null hypothesis, although the alternative hypothesis is the true state of nature. It confirms an idea that should have been rejected, claiming that two observances are the same, even though they are different.
An example of a type II error would be a pregnancy test that gives a negative result, even though the woman is in fact pregnant. In this example, the null hypothesis would be that the woman is not pregnant, and the alternative hypothesis is that she is pregnant.

Alpha Risk
The risk in a statistical test that a null hypothesis will be ... 
Beta Risk
The probability that a false null hypothesis will be accepted ... 
Type I Error
A type of error that occurs when a null hypothesis is rejected ... 
Standard Deviation
1. A measure of the dispersion of a set of data from its mean. ... 
Null Hypothesis
A type of hypothesis used in statistics that proposes that no ... 
Monte Carlo Simulation
A problem solving technique used to approximate the probability ...

Mutual Funds & ETFs
5 Ways To Measure Mutual Fund Risk
These statistical measurements highlight how to mitigate risk and increase rewards. 
Active Trading Fundamentals
Efficient Market Hypothesis: Is The Stock Market Efficient?
Deciding whether it's possible to attain aboveaverage returns requires an understanding of EMH. 
Active Trading Fundamentals
Is finance an art or a science?
The short answer to this question is "both". Finance, as a field of study and an area of business, definitely has strong roots in other scientific fields such as statistics and mathematics. Furthermore, ... 
Options & Futures
Financial Concepts
Diversification? Optimal portfolio theory? Read this tutorial and these and other financial concepts will be made clear. 
Professionals
How do companies measure labor supply in human resources planning?
Find out how and why a company's human resources department would measure labor supply, and what policies would address a shortage or surplus. 
Fundamental Analysis
Why are OTC (overthecounter) transactions controversial?
Learn more about overthecounter transactions, and why OTC traders are considered riskier than traders working with larger market exchanges. 
Fundamental Analysis
What is the difference between cost of equity and cost of capital?
Read about some of the differences between a company's cost of equity and its cost of capital, two measures of its required returns on raised capital. 
Fundamental Analysis
What is arbitrage pricing theory?
Find out what arbitrage pricing theory is and how it can theoretically be used by investors to generate riskfree profit opportunities. 
Fundamental Analysis
What does a high weighted average cost of capital (WACC) signify?
Find out what it means for a company to have a relatively high weighted average cost of capital, or WACC, and why this is important to lenders and investors. 
Fundamental Analysis
How do economists and psychologists calculate diminishing marginal utility differently?
Find out why disagreements about the validity of the law of diminishing marginal utility usually boil down to arguments about definitions.