1.We are examining the relationship between the number of cold calls a broker makes and the number of accounts the firm as a whole opens. We have determined that the correlation coefficient is equal to 0.70, based on a sample of 16 observations. Is the relationship statistically significant at a 10 percent level of significance, and why or why not? The relationship is:

A)   not significant; the critical value exceeds the t-statistic by 1.91.

B)   significant; the t-statistic exceeds the critical value by 1.91.

C)   significant; the t-statistic exceeds the critical value by 3.67.

D)   not significant; the critical value exceeds the t-statistic by 4.21.

The correct answer was B)

The calculated test statistic is t-distributed with n – 2 degrees of freedom:

t = r√(n – 2) / √(1 – r²) = 2.6192 / 0.7141 = 3.6678

From a table, the critical value = 1.76