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Suppose that the random variables Z1, Z2 and Z3 have the sample cor- relation matrix: 1 R=1/5 1/5 1/4] 1 1/3 [1/4 1/3 1
Suppose that the random variables Z1, Z2 and Z3 have the sample cor- relation matrix: 1 R=1/5 1/5 1/4] 1 1/3 [1/4 1/3 1 (i) Find the exact one-factor solution for the correlation matrix R and write down the factor loadings and specific variances for the one- factor model. [9] (ii) Use the principal component method to calculate the factor loadings and specific variances of the two-factor solution for R. [9]
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