A study of 25 marketing firms showed that the correlation between their liabilities and losses is 0.89. At the 5% significance level, can we conclude that there is positive correlation in the population?

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Null hypothesis:

Alternative hypothesis:

Decision rule:  Reject the null hypothesis if the p-value is less than the significance level 0.05.

Conclusion: Reject the null hypothesis, since the p-value is less than the significance level 0.05. The sample provides enough evidence to conclude that there is positive correlation in the population.


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