When Deciding How Many Factors to Retain in a Factor

question 10

Multiple Choice

When deciding how many factors to retain in a factor analysis,a common approach,referred to as the Kaiser-Guttman criteria,is to examine eigenvalues and retain those greater than ______.

• A)0.3
• B)0.5
• C)0.8
• D)1.0

---

Definitions:

Callable Bonds

A type of bond that can be redeemed by the issuer before its maturity date at a predetermined price.

Call Price

The price at which a bond or a preferred stock can be redeemed by the issuer before its maturity date.

Interest Rates

The price of borrowing money, expressed as a percentage of the amount borrowed, set by lenders as compensation for the risk and the opportunity cost of lending.

Floating-rate Bonds

Bonds with a variable interest rate that adjusts periodically in accordance with a benchmark interest rate or index.