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What is correct about F-test of overall validity of the model?

a. It is a two sided test of R-squared being zero versus not being zero.
b. It is one sided test of R-squared being zero versus being greater than zero.
c. A big F-statistic (bigger than critical value) means that the model has explanatory power.
d. In rare cases the value of F-statistic can be negative.

1 Answer

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Answer: B

Explanation:

It is one sided test of R-squared being zero versus being greater than zero.

These are the steps of the test.

1. State the null and alternative hypothesis: ...

2. Compute the test statistic: ...

3. Find a (1 - 0.05)×100% confidence interval for the test statistic. ...

4. Decide whether to accept or reject the null hypothesis: 5.991 ∉ [0, 2.28], so reject H 0 .

5. Determine the p-value.

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