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Chapter 14 Factor analysis - York University

,Y2,:::,Yl,arelinearlyrelatedtoasmallern umberofunob-servablefactorsF1,F2,:::, ,however,thatundercertainconditionsthehy pothesizedfactormodelhascertainimplicati ons, ,andhowthemodelcanbetested, nance, ,Y2,andY3,respectively,representastudent ' vestudents(ina10-pointnumericalscaleabov ethepassingmark), ,Y1 Marketing,Y2 Policy,Y31365273331098439751065c PeterTryfos, :FactoranalysisIthasbeensuggestedthatthe segradesarefunctionsoftwounderlyingfacto rs,F1andF2,tentativelyandratherlooselyde scribedasquantitativeabilityandverbalabi lity, ,asfollows:Y1= 10+ 11F1+ 12F2+e1Y2= 20+ 21F1+ 22F2+e2Y3= 30+ 31F1+ 32F2+e3(14:1)Theerrortermse1,e2,ande3, ,theparameters , , nanceishighlyquantitative, nance, ,itisexpectedthattheloadingshaveroughlyt hefollowingstructure:Loadingon:Variable, YiF1, i1F2, i2Y1+0Y20+Y30+Thegradeinthe nancecourseisexpectedtobepositiv

14.3 Factor loadings are not unique 5 On theonehand, therefore, wehavetheobserved variances and covari-ances of the variables; on the other, the variances and covariances implied

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