SOA Exam SRM Sample Question 44
Study guide: Exam SRM
Two actuaries are analyzing dental claims for a group of n = 100 participants. The predictor variable is sex, with 0 and 1 as possible values.
Actuary 1 uses the following regression model:
Y = \beta + \varepsilon.
Actuary 2 uses the following regression model:
Y = \beta_0 + \beta_1 \times \text{Sex} + \varepsilon.
The residual sum of squares for the regression of Actuary 2 is 250,000 and the total sum of squares is 490,000.
Calculate the F-statistic to test whether the model of Actuary 2 is a significant improvement over the model of Actuary 1.
- A) 92
- B) 93
- C) 94
- D) 95
- E) 96
Answer this question and see the worked solution