Explanation:
The first step entails formulating the hypothesis:
Hβ : Ξ²β = 0 vs. Hβ : Ξ²β β 0
The test statistic for the slope coefficient takes the form: tβΞ±,nβ2β = (Ξ²β β Ξ²β) / se(Ξ²β)
In this case, tβ.βββ
,β = (0.6566 β 0) / 0.0799 = 8.2177
(Ξ± = 5% / 2 since this is a 2-tailed test)
The critical 2-tailed values (tβ.βββ ,β) are Β±2.306
Our test statistic lies outside the non-rejection region (-2.306, 2.306). As such, we have sufficient evidence to reject the null hypothesis and conclude that the slope coefficient is statistically different than zero.
Q.77 The estimated slope coefficient (Ξ²β) for a certain stock is 0.6566, with a standard error equal to 0.0799. The sample had 10 observations, and a researcher wants to know if the slope coefficient is statistically different than zero. Using a 5% level of significance, what are the test statistic and the decision rule?
A
0.1217; do not reject H0
B
8.2177; do not reject H0
C
0.1217; reject H0
D
8.2177; reject H0
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