I the Basic Question in Testing the Significance of Rho

question 76

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) (i), (ii), and (iii) are all false statements.

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Definitions:

Risk-Free Rate

The hypothetical return rate on an investment that carries no risk, commonly depicted through the yield of government bonds.

S&P 500 Futures Contracts

Financial contracts that speculate on the future value of the S&P 500 index, allowing for hedging and investment strategies based on the anticipated market direction.

Beta

A gauge of the systematic risk or volatility of a security or a portfolio relative to the overall market.

Risk-Free Rate

The theoretical rate of return on an investment with no risk of financial loss, often represented by government bonds.