In a multiple regression model based on 30 observations and 2 independent variables, you have the estimate of b₁ equal to 1.25. The standard error of this estimate is .09. Find the 95% confidence interval for the parameter b₁.

Correct Answer: [1.06532, 1.43468].

The degrees of freedom equals 27. Therefore, the critical value of t for a 95% confidence interval will be 2.052 (the 5% probability will be split between the tails). Thus, the confidence interval will be [1.25 - 0.09 x 2.052, 1.25 + 0.09 x 2.052] = [1.06532, 1.43468].