SCENARIO 14-4
14-10 Introduction to Multiple Regression
-Referring to Scenario 14-4, suppose the builder wants to test whether the coefficient on Size is
Significantly different from 0.What is the value of the relevant t-statistic?
A) -0.7630
B) 3.2708
C) 10.8668
D) 60.0864

Question

SCENARIO 14-4  
14-10 Introduction to Multiple Regression
-Referring to Scenario 14-4, suppose the builder wants to test whether the coefficient on Size is
Significantly different from 0.What is the value of the relevant t-statistic?
A) -0.7630 
B) 3.2708 
C) 10.8668 
D) 60.0864

Quizplus · Accepted Answer

The t-statistic for testing the significance of the coefficient on Size is 3.2708. This is calculated by dividing the coefficient on Size by its standard error. The standard error is calculated by taking the square root of the variance of the coefficient on Size. The variance is calculated by multiplying the square of the standard deviation of the coefficient on Size by the number of observations.