
Explanation:
Step 1: Formulate the hypotheses
Step 2: Calculate the test statistic The t-statistic formula for testing a slope coefficient is:
Where:
Step 3: Determine the critical value
Step 4: Decision rule
Step 5: Conclusion The test statistic of 9.477 exceeds the critical value of 2.306, so we reject the null hypothesis. This provides sufficient evidence to conclude that the slope coefficient is statistically different from zero at the 5% significance level.
The estimated slope coefficient (Ξ²β) for a certain stock is 0.8823 with a standard error equal to 0.0931. Assuming that the sample had 10 observations, carry out a statistical test to determine if the slope coefficient is statistically different than zero. Quote the test statistic and the decision rule using a 5% level of significance.
A
9.477, reject Hβ
B
9.477, do not reject Hβ
C
2.307, reject Hβ
D
2.307, do not reject Hβ
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