For Which of the Following Reasons Can Factor Analysis Be

question 5

Multiple Choice

For which of the following reasons can factor analysis be used?

• A) To identify underlying dimensions among a set of variables
• B) To identify a smaller set of variables to replace an original set for use in subsequent multivariate analysis
• C) To identify product preferences for a specific target market
• D) To group people into one or more categories of a nominal, dependent variable
• E) Both a and b

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Definitions:

Cost of Capital

Represents the rate of return that a company must earn on its investment projects to maintain its market value and attract funds.

Capital Rationing

The process of selecting profitable projects under the constraint of limited available investment funds.

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, calculated as the discount rate that makes the net present value of all cash flows from the investment equal to zero.

Hurdle Rate

Hurdle Rate is the minimum acceptable return on investment or project that a business requires before it considers it viable or proceeds with it.