Problem Quants- Confidence Interval

A confidence interval is two-tailed, but it’s not a test.

Don’t confuse confidence intervals with hypothesis testing.

I’m glad you asked this question. This confused me too. And you’re not crazy despite attempts by the responses you received making it seem you are.

See the newest errata.

In the information for Practice Problems 25 through 30 (page 275 of print), the note under Exhibit 2 should read, “The critical t-value for a two-sided t-test at the 5% significance level (df = 34) is 2.032. The critical t-value for a two-sided t-test at the 1% significance level (df = 34) is 2.728.”

In Practice Problem 28 (page 276 of print), the A option should read “99% confidence interval for the slope coefficient to be 0.1594 to 0.3114.”

In the answer to Practice Problem 28 (page 281 of print), the following should be added to the end, “A is incorrect because the lower limit for the confidence interval = 0.2354 – (2.728 × 0.0760) = 0.0281 and the upper limit for the confidence interval = 0.2354 + (2.728 × 0.0760) = 0.4427. B is incorrect because the lower limit for the confidence interval = 0.0095 – (2.032 × 0.0078) = –0.0064 and the upper limit for the confidence interval = 0.0095 + (2.032 × 0.0078) = 0.0254.”

With all due respect, none of the responses he received (my responses) were intended to make @Onda think that he’s crazy. They were intended to get him to think (critically) about the problem (rather than blindly using a formula); in particular, they were intended to help him come to the understanding that a confidence interval is not a test: there is no hypothesis at play here.