Explanation Calculation: The correlation value is r = 0.3043 . The sample size n = 55 . The significance level is α = 0.025 and the test is a two tailed test. Y be the satisfaction with sales growth and X be the executive commitment to planning. Let, ρ be the correlation co-efficient. Null hypothesis: H 0 : ρ = 0 That is, the correlation is zero. Alternative hypothesis: H 1 : ρ ≠ 0 . That is, the correlation differs from zero. Critical-value: The level of significance α = 0.025 . The degrees of freedom is, d f = n − 2 = 55 − 2 = 53 For two tailed test, the critical value for t -test will be, t α 2 , ( n − 2 ) . Procedure for critical-value using EXCEL: Software procedure: Step-by-step software procedure to obtain critical-value using EXCEL software is as follows: • Open an EXCEL file. • In cell A1, enter the formula “=T.INV(0.0125,53)” Output using EXCEL software is given below: As the test is a two-tailed test, the critical-value using EXCEL is ± 2.30687 . Decision rule: • If t c a l > t α 2 , ( n − 2 ) or t c a l < − t α 2 , ( n − 2 ) , reject the null hypothesis

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Author: DOANE

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Chapter 12, Problem 63CE

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Test a two-tailed test for zero correlation.

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Chapter 12, Problem 62CE

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Chapter 12 Solutions

APPLIED STAT.IN BUS.+ECONOMICS

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Test a two-tailed test for zero correlation .

Solution Summary: The author explains the significance level of the two-tailed test, and the degrees of freedom for the critical-value.

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