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amount of life insurance -hypothesis testing

1) One member of the management board claims that for every $1000 increase in income, the amount of life insurance held will go up by $5000. Choose an alternative hypothesis and explain your choice. Does your estimated relationship support this claim? Use a 5 percent significance level.

2) Test the hypothesis that as income increases the amount of life insurance increase by the same amount. That is, test the hypothesis that the slope of the relationship is 1.

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Solution Summary

The amount of life insurance is examined.