Factor Loadings and Correlations Are Identical If Each Variable Has

question 5

True/False

Factor loadings and correlations are identical if each variable has its mean subtracted and is divided by its standard deviation.

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Definitions:

Quarterly Compounding

The process of calculating interest and adding it to the principal sum of a loan or deposit on a quarterly basis.

Effective Rate

The interest rate on a loan or investment, adjusted for the effect of compounding over a given period.

Compounded Quarterly

Generating interest on both the initial principal and previously earned interest every three months.

Annual Inflation Rate

The percentage increase in the price of goods and services over a one-year period, reflecting the decreasing purchasing power of a currency.