Question

A study of 18 worldwide financial institutions showed the correlation between their assets and pretax profit to be 0.79. Can we conclude that there is a positive correlation between assets and pretax profit?

1-b. State the decision rule for 0.10 significance level: H₀: ρ ≤ 0; H₁: ρ > 0. (Round your answer to 3 decimal places.)

Reject H0 if t >

1. 2. Compute the value of the test statistic. (Round your answer to 2 decimal places.)

1. 3. Can we conclude that the correlation in the population is greater than zero? Use the 0.10 significance level.

Reject/ Don't Reject HO. It is reasonable/ unreasonable to conclude that there is a positive association in the population between assets and pretax profit

Answer 1

| -6. The decision seule for 0.10 significance level in Reject Ho if t> *<, M-2 where x=0.10 Mz sample size. 2. The test statistic will be =r&M.2 11-1² where resample correlation na sample sige. Here, r=0.79 and n=18 so, 5:1541 ~5:15 +* 0-79+118-2 J7-10-79) 3. Value of to-10,16 = 1337 (obtained from t- table) * Here, ť to.10,16 ie. 5:15 >1:337 So, we will suject Ho. It in reasonable to conclude that there in a positive association in the population between assets and bre tax brolit. CS Scanned with CamScanner