Question

A -- A study of 22 worldwide financial institutions showed the correlation between their assets and pretax profit to be 0.83.

1. State the decision rule for 0.050 significance level: H₀: ρ ≤ 0; H₁: ρ > 0. (Round your answer to 3 decimal places.)

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

3. Can we conclude that the correlation in the population is greater than zero? Use the 0.050 significance level.

B -- The owner of Maumee Ford-Volvo wants to study the relationship between the age of a car and its selling price. Listed below is a random sample of 12 used cars sold at the dealership during the last year.

Car				Age (years)				Selling Price ($000)
	1				9				11.6
	2				5				10.0
	3				12				3.2
	4				15				3.7
	5				7				7.0
	6				6				12.5
	7				8				7.8
	8				13				8.4
	9				12				8.4
	10				15				4.8
	11				4				9.2
	12				4				7.3

  

1. Determine the regression equation. (Negative amounts should be indicated by a minus sign. Round your answers to 3 decimal places.)

2. Estimate the selling price of an 8-year-old car (in $000). (Round your answer to 3 decimal places.)

3. Interpret the regression equation (in dollars). (Round your answer to the nearest dollar amount.)

Answer 1

1- A study of 22 worldwide financial institutions showed the correlation between their assets and pretax profit to be 0.83.

1. State the decision rule for 0.050 significance level: H0: ρ ≤ 0; H1: ρ > 0. (Round your answer to 3 decimal places.)
2. Compute the value of the test statistic. (Round your answer to 2 decimal places.)
3. Can we conclude that the correlation in the population is greater than zero? Use the 0.050 significance level.

Since the correlation coefficient is greater than 0.36, We can reject the null hypothesis that correlation is less than or equal to 0.