SCENARIO 14-8 a Financial Analyst Wanted to Examine the Relationship $\$ 1,000$

question 37

Short Answer

SCENARIO 14-8 A financial analyst wanted to examine the relationship between salary (in $\$ 1,000$ ) and 2 variables: age $\left(X_{1}=\mathrm{Age}\right)$ and experience in the field $\left(X_{2}=\right.$ Exper). He took a sample of 20 employees and obtained the following Microsoft Excel output:

$\begin{array}{lr}\hline {\text { Regression Statistics }} \\\hline \text { Multiple R } & 0.8535 \\\text { R Square } & 0.7284 \\\text { Adjusted R Square } & 0.6964 \\\text { Standard Error } & 10.5630 \\\text { Observations } & 20 \\\hline\end{array}$

$\text { ANOVA }$


$\begin{array}{lrrrrrr} & \text { Coefficients } & \text { Standard Error } & {\text { t Stat }} & \text { P-value } & \text { Lower 95\% } &{\text { O5\% }} \\\hline \text { Intercept } & 1.5740 & 9.2723 & 0.1698 & 0.8672 & -17.9888 & 21.1368 \\\text { Age } & 1.3045 & 0.1956 & 6.6678 & 0.0000 & 0.8917 & 1.7173 \\\text { Exper } & -0.1478 & 0.1944 & -0.7604 & 0.4574 & -0.5580 & 0.2624 \\\hline\end{array}$
Also the sum of squares due to the regression for the model that includes only Age is 5022.0654 while the
sum of squares due to the regression for the model that includes only Exper is 125.9848.
-Referring to Scenario 14-8, the partial F test for $H _ { 0 }$ : Variable $X _ { 2 }$ does not significantly improve the model after variable $X _ { l }$ has been included $H _ { 1 }$ : Variable $X _ { 2 }$ significantly improves the model after variable $X _ { I }$ has been included has $\underline{\quad\quad}$ and $\underline{\quad\quad}$ degrees of freedom.

---

Definitions:

Duress

Unlawful pressure or coercion used on a person to compel them to perform an act against their will or judgment.

Breach

An act of breaking or failing to observe a law, agreement, or code of conduct, similar to a violation but often used in the context of contracts.

Contract

A legal agreement between two or more parties that creates obligations which are enforceable or recognized by law.

Mistake of Fact

A misunderstanding by one or more parties to a contract about a material fact that is essential to the agreement, which can sometimes render the contract voidable.