Suppose that the random variables Z₁, Z₂ and Z3 have the

Last updated: 8/4/2022

Suppose that the random variables Z₁, Z₂ and Z3 have the sample correlation matrix: 1 1/5 1/4 R= 1/5 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. (ii) Use the principal component method to calculate the factor loadings and specific variances of the two-factor solution for R.