Solution

ID: past-exam-of-the-probability-statistics-and-options-ii-course-of-the-university-of-oxford/2009/o/o5/i/solution

For the specified parameter there is no fitted parameter, so the null reference has degrees of freedom. The given deviance is , below the supplied five-percent critical value . Hence do not reject the fixed log-series model at level five percent. The parameter is fixed in this test, so subtracting an additional degree of freedom would be inappropriate.

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