A student's t-test would be useful in (A). testing the significance of…

2023

A student's t-test would be useful in

(A). testing the significance of difference of two sample means
(B). testing the stationarity of a time series
(C). testing the significance of correlation coefficient
(D). testing the significance of a regression coefficient
(E). testing the goodness of fit of a model

Choose the correct answer from the options given below:

  1. A.

    (A), (B) and (C) only.

  2. B.

    (B), (C) and (D) only.

  3. C.

    (A), (C) and (D) only.

  4. D.

    (A), (B), (D) and (E) only

Show answer & explanation

Correct answer: C

Concept: Student's t-test is a hypothesis test built on the t-distribution. Under the standard model assumptions (independent observations, an approximately normal sampling distribution for the statistic, and an unknown population variance estimated from the sample), it is used whenever a sample statistic — a mean difference, a Pearson correlation coefficient, or an estimated regression coefficient — is divided by its own standard error to test whether the true underlying value is zero.

  1. Testing the difference of two sample means — under the standard model assumptions, the two-sample (independent or paired) t-test tests whether μ1 equals μ2 by dividing the observed mean difference by its standard error, and the resulting statistic is referred to the Student-t distribution.

  2. Testing the stationarity of a time series — stationarity is assessed with a unit-root test such as the Augmented Dickey-Fuller test. Its statistic is computed in a t-like ratio form, but under the null of a unit root it is referred to Dickey-Fuller critical values, a distribution derived specifically for the unit-root setting.

  3. Testing the significance of a correlation coefficient — under the classical bivariate-normal assumptions, for a sample correlation r the statistic t = r√(n − 2) / √(1 − r2) is referred to the Student-t distribution with (n − 2) degrees of freedom.

  4. Testing the significance of a regression coefficient — under the classical linear-model assumptions (independent, normally distributed errors), each estimated coefficient in a linear regression is tested by dividing it by its own standard error, and the resulting statistic is referred to the Student-t distribution.

  5. Testing the goodness of fit of a model — goodness of fit is assessed with a chi-square test (for frequency/categorical data) or an F-test (for overall regression fit); the resulting statistic is referred to the chi-square distribution or the F distribution respectively.

Cross-check:

  • Stationarity testing and goodness-of-fit testing rely on statistics referred to their own distinct sampling distributions — Dickey-Fuller critical values, and the chi-square or F distribution respectively.

  • Under the standard model assumptions, mean-difference testing, correlation-significance testing, and regression-coefficient testing all share the same underlying form — an estimate divided by its own standard error, referred to the Student-t distribution — which is what defines a Student's t-test; the same ratio form can still land on a different distribution (as with the Dickey-Fuller statistic) when those assumptions do not hold.

So, among the five statements, the genuine Student's t-test applications are the mean-difference test, the correlation-coefficient significance test, and the regression-coefficient significance test — the time-series-stationarity test and the model-goodness-of-fit test are not.

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