Whats the F business
There is always a reference to F distribution in regression and frankly I never cared a damn as I had never really paid attention. Working with markets makes you think hard about statistics.
The reason F stats comes in to picture is this :
Let X be a random var and you want to test the hypo X= b,
You can use X-b/ sigma ~ Normal
or
Square the LHS and divide by degrees of freedom. Substitute sigma by sample sigma which is again a Chi Square with different dof.
So Chi square (1) / Chi square (2) is an F distribution and thats the reason F is used everywhere..
From Johnston, my bible , you can clearly see it below :