It Is Recommended That the Following Two Assumptions Be Evaluated

question 15

Multiple Choice

It is recommended that the following two assumptions be evaluated and any necessary transformations be made to ensure the quality of data and improve the quality of the resulting factor or component solution:

• A) All variables, as well as all linear combinations of variables, must be normally distributed.
• B) The relationships among all variables must be linear.
• C) The relationships among all pairs of variables must be linear.
• D) Both (a) and (c) are correct.

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Definitions:

Dividend

A portion of a company's earnings distributed to shareholders, typically in the form of cash or additional stock.

Expected Decline Rate

The anticipated rate at which a value, such as stock price or economic indicator, is projected to decrease over a specified period.

P/E Ratio

The price-to-earnings ratio, a valuation metric that compares the current share price of a company to its per-share earnings, used to evaluate if a stock is over or undervalued.

Dividend Payout Ratio

A financial metric that measures the percentage of a company's earnings paid out to shareholders as dividends.