US CMA Part 1 · Chapter 6 · Question 17 of 22
In a regression of delivery cost on miles driven, the slope coefficient is 3.6 and its standard error is 1.2. Using the common rule of thumb, what can be concluded?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The t-statistic is 3.0, which exceeds 2, so miles driven is a statistically significant explanatory variable
Explanation
The t-statistic = coefficient / standard error = 3.6 / 1.2 = 3.0. A t-value greater than about 2 indicates that the coefficient is significantly different from zero at roughly the 95% confidence level, so the independent variable has explanatory power.
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