CFA Practice Question

There are 208 practice questions for this study session.

CFA Practice Question

Beth has two independent variables and 25 observations in her regression analysis. The t-statistic for one of the independent variables X1 is 1.98. What is the critical value for Student's t distribution? Is the variable significant at the 5% confidence level? Assume 2-tailed test.

Correct Answer: The critical value is 2.074, and the variable is not significant.

The degrees of freedom: 25 - 2 - 1 = 22.
t0.025, 22: 2.074.
As 1.98 < 2.074, the variable is not significant at the 5% confidence level.

User Contributed Comments 2

User Comment
wink26 Why not 1.717? I thought the CI was 5%?
jhmorris Since the t-test seeks to determine whether or not the null hypothesis that X1 is equal to zero should be rejected, this is a two-tailed test. As such, at the 5.00% significance level, you use column 2 to determine the critical value.
You need to log in first to add your comment.