SOA Exam SRM Sample Question 67
Study guide: Exam SRM
A and B each attempt a task 10 times. A is successful 8 out of 10 times while B is successful 2 out of 10 times. They fit a logistic regression model to predict an individual's success with linear term \beta_0 + \beta_1 X, where X is an indicator variable for individual A.
The full model estimates that A will be successful 80% of the time and B will be successful 20% of the time. Under the null hypothesis that \beta_1 = 0, the estimate is that both A and B will be successful 50% of the time. The likelihood ratio test is applied to the logistic regression model.
Determine the lowest available significance level at which the null hypothesis is rejected.
- A) 0.100
- B) 0.050
- C) 0.025
- D) 0.010
- E) 0.005
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