A research analyst believes that a positive relationship exists between a firm's advertising expenditures and its sales. For 65 firms, she collects data on each firm's yearly advertising expenditures and its sales. She calculates a Spearman rank correlation coefficient of 0.45. At the 5% confidence level, which of the following is the correct conclusion about the relationship between advertising and sales?
A) Reject the null hypothesis; we cannot conclude advertising and sales are correlated.
B) Do not reject the null hypothesis; we can conclude advertising and sales are correlated.
C) Reject the null hypothesis; we can conclude advertising and sales are correlated.
D) Do not reject the null hypothesis; we cannot conclude advertising and sales are correlated.

Question

Quizplus · Accepted Answer

The null hypothesis is that there is no correlation between advertising expenditures and sales. Since the calculated Spearman rank correlation coefficient of 0.45 is greater than the critical value (which is not given in the question), we can reject the null hypothesis at the 5% confidence level, and conclude that there is a positive correlation between advertising expenditures and sales. Therefore, the correct answer is C.

A Research Analyst Believes That a Positive Relationship Exists Between