Homework SourseA study of 26 worldwide financial institutions showed the co
A study of 26 worldwide financial institutions showed the correlation between their assets and pretax profit to be .87.
| 1. | State the decision rule for .025 significance level: H0: 0; H1: > 0 (Round your answer to 3 decimal places.) |
Solution
Test For correlation co-efficient
Set Up Hypothesis
Null, H0: <0
Alternate, H1: >=0
Test Statistic
Value of ( r ) =0.87
Number (n)=26
we use Test Statistic (t) = r / Sqrt(1-r^2/(n-2))
to=0.87/(Sqrt( ( 1-0.87^2 )/(26-2) )
to =8.644
|to | =8.644
Critical Value
The Value of |t | at LOS 0.025% is 2.064
We got |to| =8.644 & | t | =2.064
Make Decision
Hence Value of | to | > | t | and Here we Reject Ho
ANS:
1.Reject H0 if t > 2.064
2. to =8.644
