Which of the Following Statements Is Not True About Factor

question 30

Multiple Choice

Which of the following statements is not true about factor rotation?

• A) Through rotation, the factor matrix is transformed into a simpler one that is easier to interpret
• B) Rotation affects the communalities and the percentage of total variance explained
• C) Preferably, variables should load on only one factor
• D) Different rotation methods may identify different factors
• E) One rotation method is varimax

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Definitions:

Debt Ratio

A financial ratio that compares a company’s total debt to its total assets, indicating the proportion of a company's assets that are financed by debt.

TIE Ratio

The times interest earned ratio, a financial metric measuring a company's ability to meet its debt obligations based on its current income.

Window Dress

Practices by mutual funds and other portfolio managers near the reporting period end to improve the appearance of the financial statements.

Current Ratio

A financial metric that compares a company's current assets to its current liabilities, indicating its ability to meet short-term debt obligations.