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Basic Question 1 of 7

True or False? If False, correct the statement.

Suppose you are performing a simple linear regression of Y on X and you test the hypothesis that the slope (β) is zero against a two-sided alternative. You have n = 25 observations and your computed test (t) statistic is 2.6. Then your P-value is given by .01 < P < .02, which gives borderline significance (i.e., you would reject H(0) at α = .02 but fail to reject H(0) at α = .01).

User Contributed Comments 11

User Comment
woojacky GOOD
Flora0406 I can't get this one.
bmeisner You need a t table for this to check the p values. It will show you what the answer tells you that t(23, alpha=.02)=+-2.5 and that t(23, .01)=+-2.8. Does anyone remember if we have to memorize the t-values or is that given on the test?
xiajessy yeah, we have to remember t VALUE
xiajessy I mean certain critical t value like at 10% , 5%, 1% significance level, the rest will be provided via a table
Nightsurfer Guys, we won't have to memorize t-values. If this were the normal distribution, perhaps. But t-value is a function of d.f. and confidence. WAY too hard to memorize!
Cesarnew We do not need to memorize any t-values for this question. Just to understand and to interpret the P-value.All the relevant info is given.
cfaajay Guys when P value is given,use that for determining if null hypothesis will be rejected or not..When p-value is less then the level of significance ,reject the null hypothesis for that level of significance as is the case here P value is less then level of significance (0.2) ,so reject null .
quanttrader reject at 0.02 since t > t(critical)

fail to reject at 0.01 since t< t(critical)
quanttrader alpha at 0.01 implies a more conservative approach -- ie CL is 99%, and thus it will be harder to reject the null
jpowers Remember this is a two-tailed test.
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I used your notes and passed ... highly recommended!
Lauren

Lauren

Learning Outcome Statements

describe the use of analysis of variance (ANOVA) in regression analysis, interpret ANOVA results, and calculate and interpret the standard error of estimate in a simple linear regression

CFA® 2025 Level I Curriculum, Volume 1, Module 10.