If the variables are standardized,the factor model may be presented as ________. A)X_i= A_i1 F₁+ A_i2 F₂+A_i3 F₃+ ...+ A_im F_m+V_iU_i B)X_i = W_i1 F₁+ W_i2 F₂+W_i3 F₃+ ...+ W_im F_m+V_iU_i C)F_i = W_i1 X₁+ W_i2 X₂+W_i3 X₃+ ...+ W_im X_m+V_iU_i D)X_i = A_i1 F₁+ A_i2 F₂+A_i3 F_{3 + ...+} A_im F_m

Question

Quizplus · Accepted Answer

Standardization ensures that the variables have a mean of 0 and a standard deviation of 1, which is required for the factor model to work effectively. Choice A presents a factor model with standardized variables, represented by the use of "AS1U1B1i" and "FS1U1B1m."

If the Variables Are Standardized,the Factor Model May Be Presented