- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 5. Multiple Regression
- Subject 2. Testing the Significance of a Regression Coefficient

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**CFA Practice Question**

Beth has two independent variables and 25 observations in her regression analysis. The t-statistic for one of the independent variables X

_{1}is 1.83. She wants to test H_{0}: β_{1}<= 0 against H_{1}: β_{1}> 0. What is the critical value for Student's t distribution and is the variable significant at the 5% confidence level?

A. The critical value is 1.714, and the variable is significant.

B. The critical value is 1.717, and the variable is significant.

C. The critical value is 2.060 and the variable is not significant.

**Explanation:**The degrees of freedom: 25 - 2 - 1 = 22.

Critical value t

_{0.05, 22}: 1.717.

As 1.717 < 1.83, the variable is significant at the 5% confidence level.

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**User Contributed Comments**
2

User |
Comment |
---|---|

nasdak |
when would the variable be insignificant? |

StJohnDale |
Variable is significant because we reject H0 |