Reading 11 T-test and Q26

CFA Level II Quant
#1

Sorry if this post looks too messy, but im going to put two questions i have for this reading together.

Question 1: Reading 11 introduced two t-tests:

  1. t = r x sqrt(n-2) /[1-square®]. - equation (3)

  2. t = [b1\_estimate - b1]/ sd(b1_estimate). -equation (10)

this has been a long time confusion. Can someone please explain when each should be used?

Question 2: Q26 I appreciate it if someone can show me how the answer has arrived.

Thanks

#2

The first t-test is testing whether correlation is 0, the second t-test is testing whether your linear regression parameter b1 is 0.

Sorry, but I can’t help you with the second question since I don’t have the material.

#3

Thanks for helping me with this question. It’s right to the point, and I really appreciate it!