A bank is interested in determining whether its customers' checking balances are linearly related to their savings balances. A sample of n = 20 customers was selected and the correlation was calculated to be +0.40. If the bank is interested in testing to see whether there is a significant linear relationship between the two variables using a significance level of 0.05, the value of the test statistic is approximately t = 1.8516.

Question

Quizplus · Accepted Answer

Given the correlation coefficient (r) of +0.40 and sample size (n) of 20, the test statistic (t) can be calculated using the formula $t = r\sqrt{\frac{n-2}{1-r^2}}$. Plugging in the given values, the calculation indeed yields a t-value close to 1.8516, which is used to test the significance of the correlation at the 0.05 level.

A Bank Is Interested in Determining Whether Its Customers' Checking