# Statistics question interpretation

• Dec 4th 2012, 06:55 AM
entrepreneurforum.co.uk
Statistics question interpretation
Hello,

I'm going through some past exam papers and would like it if someone could offer some help with some suggested solutions/ suggested formulas to calculate etc, I find it a bit difficult in just interpreting the questions and don't fully understand what kind of formulas they are asking for....

I need to test the hypothesis that B(x) = 1 and then interpret this result

What test should I be using... the F statistic?

and then they add a new variable into a new regression output and ask the following;

Comment on the new variable, analyse its magnitude and stat sig @ 5%

Here (I have two regression outputs) one with the old variables and now the second with the new variable added - do I just look at the new variables P-Value... (the P-value is 0.08; so its not statistically significant) and regarding the magnitude, what am I supposed to say here, that if we used the 0.1 statistical significance level then it would be accepted...

Then the next question it asks;

Rsquared of the two variables = 0.9677, calculate the VIF of variable x and variable y, explain your results...

here do we just compute [1/1-0.9677) = 0.323... to give the VIF value which suggest no multicolinearity right... as its much less than < 5...

Next question...

Looking at the regression output and your answer to the VIF - would you set an alternative specification for the model...
write this specification and justify yourself...

So here... I get abit more lost...

Any advice in the right direction would be great,

thanks
• Dec 4th 2012, 08:12 AM
HallsofIvy
Re: Statistics question interpretation
Quote:

Originally Posted by entrepreneurforum.co.uk
Hello,

I'm going through some past exam papers and would like it if someone could offer some help with some suggested solutions/ suggested formulas to calculate etc, I find it a bit difficult in just interpreting the questions and don't fully understand what kind of formulas they are asking for....

I need to test the hypothesis that B(x) = 1 and then interpret this result

Surely, you have information than this? What does B(x) mean? You can't just pull a random variable out of the air!

Quote:

What test should I be using... the F statistic?

and then they add a new variable into a new regression output and ask the following;

Comment on the new variable, analyse its magnitude and stat sig @ 5%

Here (I have two regression outputs) one with the old variables and now the second with the new variable added - do I just look at the new variables P-Value... (the P-value is 0.08; so its not statistically significant) and regarding the magnitude, what am I supposed to say here, that if we used the 0.1 statistical significance level then it would be accepted...

Then the next question it asks;

Rsquared of the two variables = 0.9677, calculate the VIF of variable x and variable y, explain your results...

here do we just compute [1/1-0.9677) = 0.323... to give the VIF value which suggest no multicolinearity right... as its much less than < 5...

Next question...

Looking at the regression output and your answer to the VIF - would you set an alternative specification for the model...
write this specification and justify yourself...

So here... I get abit more lost...

Any advice in the right direction would be great,

thanks
• Dec 4th 2012, 08:45 AM
entrepreneurforum.co.uk
Re: Statistics question interpretation
With regard to B(x) = 1, I should of made myself clearer, I mean Beta(x) where x is just a number i) 1,2...i

I can send the exam in a PM if you want...

I am not looking for the answers just some guidance on if you were asked similar questions what sort of calculations would you do...