When Using Eigenvalues to Determine the Number of Factors,only Factors

question 10

True/False

When using eigenvalues to determine the number of factors,only factors with eigenvalues greater than .05 are retained.

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Definitions:

Compounded Annually

A method of calculating interest where the interest earned each year is added to the principal, leading to an increase in the amount of interest earned in subsequent years.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in discounting and investment appraisal.

Annuity

A fiscal tool that disburses a set sequence of payments to a person, frequently serving as a financial income for retirees.

Equal Payments

Regular payments of the same amount, typically used in the context of loans or amortization schedules.