A Sample of 200 Monthly Observations Is Used to Run

question 62

Multiple Choice

A sample of 200 monthly observations is used to run a simple linear regression: Returns = β₀ + β₁ Leverage + ε.A 5% level of significance is used to study if leverage has a significant influence on returns.The value of the test statistic for the regression coefficient of Leverage is calculated as t₁₉₈ = -1.09,with an associated p-value of 0.2770.The correct decision is to __________________________________________________________.

• A) reject the null hypothesis and conclude that leverage significantly explains returns
• B) reject the null hypothesis and conclude that leverage does not significantly explain returns
• C) not reject the null hypothesis and conclude that leverage does not significantly explain returns
• D) not reject the null hypothesis and conclude that leverage significantly explains returns

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