Given a linear regression model, which of the following hypothesis about the coefficients can be tested using a F-test? (i) H : B2B3 + B4 = 1 (ii) Ho : B3 = 6 (iii) Ho : B2 = 0 and B3 = 0 and B4 = 0 and Bs = 0 (iv) Ho : B2B3 1 = Select one: A

In regression analysis, F-test basically signifies the overall fit of the regression model by examining how well the data fits any concerned regression model with the independent variable/s as opposed to the one without any independent variable/s. In this context, the null hypothesis under the F-test states that the regression model with the independent variable/s fits the data as well as the model without it/those and the alternate hypothesis states that the model with the independent variable/s fits the data better than the one without the independent variable/s. In this particular case, the hypothesis (iii) states that the coefficients of the independent variables in the concerned regression model are all equal to 0 implying that the independent variables do not have any statistical impact or effect on the dependent variable and hence, the regression model with the independent variables fits the data as well as the one without the independent variables or with only intercept term. Therefore, only hypothesis (iii) fits the null hypothesis or Ho under the F-test, in this case and all other hypotheses or hypothesis (i), (ii), and (iv) essentially imply that either one or more of the independent variables has or have a statistical impact or effect on the dependent variable signifying that the model with the independent variable/s fits the model better than the one without it/them or with only intercept term, which is the alternate hypothesis under the F-test. Thus, the answer, in this case, would option D. given in the answer choices or options or None of these.

Answer :

For an independent project to be accepted, the present worth(PW) of the project evaluated at MARR should be equal or greater than zero.

Explanation :

Present value (PV) is the current value of a future sum of money or stream of cash flows given a specified rate of return

A minimum acceptable rate of return (MARR) is the minimum profit an investor expects to make from an investment, taking into account the risks of the investment and the opportunity cost of undertaking it instead of other investments.

Therefore, the idea behoind this is ,

that if investor is able to achieve minimum possible return (risk free return) in case of an individual project evaluation, which would be at the point where, present worth of the project is either equal to or greater than zero, then he should accept the project.

Because if present worth at MARR is equal to zero, then it means that we are able to cover all our expenses(no profit no loss situation)

and if it is greater than zero, then we have started making profits.