Given the variance/covariance matrix for Grey and Jars, in a one-sided hypothesis test that the returns are positively correlated H0: ρ = 0 vs. H1: ρ > 0, Standish would: A) reject the null at the 5% but not the 1% level of significance. B) reject the null at the 1% level of significance. C) need to gather more information before being able to reach a conclusion concerning significance. Your answer: B was correct! r= .53 T-stat = 2.485920353 / .84799764 ≈ 2.93 5% CV = 1.717 1% CV = 2.508 why do we reject only the 1% but not the 5%? the Tstat is higher than the CV in both cases…
yeah you do, but they didn’t give you that option, so just go with the option that is most right (as in B)
thanks. need to be more alert