A study of 29 worldwide financial institutions showed the correlation between th

Question

A study of 29 worldwide financial institutions showed the correlation between their assets and pretax profit to be .90.

1. State the decision rule for .025 significance level: Hop 0, H-> 0 (Round your answer to 3 decimal places.) Reject Ho if t> 2. Compute the value of the test statistic. (Round your answer to 3 decimal places.) Value of the test statistic 3. Can we conclude that the correlation in the population is greater than zero? Use the 025 significance level Reject population between assets and pretax profit. Ho. It is reasonable Ho . It is reasonable ' to conclude that there is positive association in the

Explanation / Answer

Set Up Hypothesis
Under The Null Hypothesis H0: <=0
Under The Alternate Hypothesis H1: >0
Test Statistic
Value of ( r ) =0.9
Number (n)=29
we use Test Statistic (t) = r / Sqrt(1-r^2/(n-2))
to=0.9/(Sqrt( ( 1-0.9^2 )/(29-2) )
to =10.73
|to | =10.73
Critical Value
The Value of |t | at LOS 0.025% is 2.052
We got |to| =10.73 & | t | =2.052
Make Decision
Hence Value of | to | > | t | and Here we Reject Ho

1.
Reject Ho if    t>2.052

2.
to =10.73

3.
Reject Ho, Reasonable

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