SCENARIO 18-2
One of the Most Common Questions of Prospective $\beta$

question 293

Multiple Choice

SCENARIO 18-2
One of the most common questions of prospective house buyers pertains to the cost of heating in dollars (Y) . To provide its customers with information on that matter, a large real estate firm used the following 4 variables to predict heating costs: the daily minimum outside temperature in degrees of Fahrenheit ( X₁ ) , the amount of insulation in inches ( X ₂ ) , the number of windows in the house ( X₃ ) , and the age of the furnace in years ( X ₄ ) . Given below are the EXCEL outputs of two regression models.


-Referring to Scenario 18-2 and allowing for a 1% probability of committing a type I error,what is the decision and conclusion for the test H₀ : $\beta$ ₁ = $\beta$ ₂ = $\beta$ ₃ = $\beta$ ₄ = 0 vs.H₁ : At least one $\beta$ _j $\neq$ 0, j = 1,2,...,4 using Model 1?

• A)Do not reject H₀ and conclude that the 4 independent variables have significant individual linear effects on heating costs.
• B)Reject H₀ and conclude that the 4 independent variables taken as a group have significant linear effects on heating costs.
• C)Do not reject H₀ and conclude that the 4 independent variables taken as a group do not have significant linear effects on heating costs.
• D)Reject H₀ and conclude that the 4 independent variables taken as a group do not have significant linear effects on heating costs.

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Definitions:

Schedule K-1

A tax document used to report the income, losses, and dividends of a partnership or S corporation's partners or shareholders.

Separately Stated

Items on a partnership or S corporation tax return that must be reported separately on the owners' personal tax returns.

Taxable Dividend

A dividend paid to shareholders that is subject to income taxation.

Corporate Earnings And Profits

The measure of a corporation's ability to generate income over its costs and expenses within a specific period.