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# Question 9, Exam 2013 from GARP

#### SamuelMartin

##### New Member
Could anyone help me to understand the answer to the question below?

How do I know that F-Statistic is significant at the 95% confident with the information provided in the problem? It just just a limit where we define that F-Statistic is significant at a determinate % of confident?

Then, Why do we reject the null hypothesis? It is because the F-Statistic is significant? Is that the trigger to reject the null hypothesis: the fact that F-Statistic is significant? If not, what it is?

Thank you very much !!!!!!!!

#### Alex_1

##### Active Member

" Hi @Ekin4112 The t-stats are used to test the significance of the individual coefficients; e.g., is B1 significant? is B2 significant. The key to the question is (emphasis mine): "You wish to test the joint null hypothesis that β1 = 0 and β2 = 0 at the 95% confidence level." A joint test of several/all coefficients requires an F-stat. With respect to the p-value (aka, exact significance level), I think the best thing to do with a p-value is to insert into this sentence "We are [100% - p%] confident that we can reject the null." (because confidence = 1 - significance). In this case, the p-value of 0.045 implies we can say "We are 95.5% confident we can reject the null" which implies we can reject then null for any confidence <= 95.5% but we cannot for any confidence greater than 95.5%. I hope that helps, "

Best regards,

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