Suppose we were interested in testing the joint significance of b₁ and b₂ in terms of data from question 13. That is, the null hypothesis is H₀: β₁ = β₂ = 0.

(a) Explain how we would conduct such a test.

(b) Test the joint significance of b₁ and b₂.

Question 13

The chairperson of the finance department at Rutgers University would like to find the relationship between undergraduate grade point average (UGPA) and GMAT scores on graduate grade point average (GGPA). She collects the following data on six students.

(a) Calculate the regression parameters for α, β₁, and β₂.

(b) Compute the standard errors of the regression coefficients. Use a t-test to test the significance of b₁ and b₂.

Transcribed Image Text:

UGPA, X1 3.45 3.10 3.00 2.95 3.11 2.87 GMAT, x2 485 500 525 560 575 625 GGPA, y 3.62 3.75 3.81 3.88 3.85 3.95