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jgosset2 jgosset2
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Posts: 62
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6 years ago
A study of 8 worldwide financial institutions showed the correlation between their assets and pretax profit to be .76.
 
1. State the decision rule for .010 significance level: H0: ρ ≤ 0; H1: ρ > 0 (Round your answer to 3 decimal places.)
 
  Reject H0 if t >_____?   
 
 
2. Compute the value of the test statistic. (Round your answer to 3 decimal places.)
 
Value of the test statistic: 2.864
 
 
3. Can we conclude that the correlation in the population is greater than zero? Use the .010 significance level

Reject or do not reject H0?

It is reasonable to conclude that there is positive association in the population between assets and pretax profit?

Need help within the next hour please and thank you.
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wrote...
Educator
6 years ago
Hi there!

Welcome back, see if this works and respond back

First, let ? be the population correlation coefficient.

H0: ? = 0
H1: ? > 0

r = 0.75

t = r sqrt(n-2) / sqrt(1-r^2)

t = (0.75) sqrt(6) / sqrt(1- (0.75)^2)
t = 2.78

The critical t-value with 6 degrees of freedom and 1% level of significance is 2.158

Computed t = 2.78 > critical t of 2.158
Therefore, we reject the null hypothesis.
The correlation in the population is greater than zero.
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