What Is the Purpose of Factor Analysis

question 1

Multiple Choice

What is the purpose of factor analysis?

• A) The purpose of factor analysis is to reduce many individual items into a smaller number of variables.
• B) The purpose of factor analysis is to use a set of variables to predict an outcome variable.
• C) The purpose of factor analysis is to look for a relationship between two variables.
• D) The purpose of factor analysis is to determine if there is a significant difference between the means of two groups.

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Definitions:

Amortization

The process of gradually writing off the initial cost of an asset over its useful life.

Bond Investment

An investment in debt securities issued by corporations or governments to finance their operations.

Other Comprehensive Income

Other Comprehensive Income represents revenues, expenses, gains, and losses not included in net income, and reflects changes in equity during a period except those resulting from investments by and distributions to owners.