I the Basic Question in Testing the Significance of Rho

question 13

Multiple Choice

i. The basic question in testing the significance of rho is to see if there is zero correlation in the population from which the sample was selected.
Ii) A t test is used to test the significance of the coefficient of correlation.
Iii) Suppose a sample of 15 homes recently sold in your area is obtained. The correlation between the area of the home, in square feet, and the selling price is 0.40. We want to test the hypothesis that the correlation in the population is zero versus the alternate that it is greater than zero. You determine that the rejection region should fall in the lower tail if this is a one-tailed test and we use a 0.01 significance level.

• A) (i), (ii) and (iii) are all correct statements
• B) (i) and (ii) are correct statements, but not (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) All statements are false

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Definitions:

Annuities

Financial products that provide a stream of payments over time to the holder, often used for retirement purposes.

Retirement Years

The period of life after one ceases working full time based on achieving a certain age or financial status.

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The percentage change in an investment's value over a one-year period, including any dividends or interest, reflecting the compound annual growth rate.

Annual Return

The percentage change in the value of an investment over one year, taking into account both price increases and income received from the investment.