Page 26 - FINAL CFA II SLIDES JUNE 2019 DAY 2
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LOS 8.c: Formulate an Ho and Ha about the population value of
a regression coefficient, calculate the value of the test statistic, READING 8: MULTIPLE REGRESSION AND ISSUES IN REGRESSION ANALYSIS
and determine whether to reject Ho at a given SL.
LOS 8.d: Interpret the results of hypothesis tests of regression MODULE 8.2: HYPOTHESIS TESTS AND CONFIDENCE INTERVALS
coefficients.
Hypothesis Testing of Regression Coefficients
The quantum of the of a multiple regression coefficient/s do not fully explain the dependent variable/s; thus, hypothesis testing
helps determine if the independent variables make a significant contribution to explaining the variation in the dependent variable.
For the df in this case, “k” is the number of regression coefficients
in the regression, and the “1" is for the intercept term.
Determining Statistical Significance
The most common hypothesis test done on the regression coefficients is to test statistical significance, which means testing the
null hypothesis that the coefficient is zero versus the alternative that it is not:
