Question #7
Reading: Reading 1 Multiple Regression
PDF File: Reading 1 Multiple Regression.pdf
Page: 3
Status: Unattempted
Question
Consider the following estimated regression equation, with calculated t-statistics of the estimates as indicated: AUTOt = 10.0 + 1.25 PIt + 1.0 TEENt – 2.0 INSt with a PI calculated t-statistic of 0.45, a TEEN calculated t-statistic of 2.2, and an INS calculated t-statistic of 0.63. The equation was estimated over 40 companies. Using a 5% level of significance, which of the independent variables significantly different from zero?
Answer Choices:
A. TEEN only
B. PI and INS only
C. PI only
Explanation
The critical t-values for 40-3-1 = 36 degrees of freedom and a 5% level of significance are ±
2.028. Therefore, only TEEN is statistically significant.