Sampling and Estimation

Question 1

_____ _____ refers to selecting a sample when we know the probability of each sample member in the overall population.

Answer 1

Probability sampling

Question 2

With _____ sampling, each item is assumed to have the same probability of being selected.

Answer 2

Random

Question 3

_____ _____ sampling is an appropriate method if we want to estimate the mean profitability for a population of firms.

Answer 3

Simple random

Question 4

_____ _____ is based on either low cost and easy access to some data items, or on using the judgment of the researcher in selecting specific data items.

Answer 4

Non-probability sampling

Question 5

_____ _____ is the difference between a sample statistic (such as the mean, variance, or standard deviation of the sample) and its corresponding population parameter (the true mean, variance, or standard deviation of the population).

Answer 5

Sampling error

Question 6

The _____ _____ of the sample statistic is a probability distribution of all possible sample statistics computed from a set of equal-size samples that were randomly drawn from the same population.

Answer 6

Sampling distribution

Question 7

_____ sampling, selecting every nth member from a population.

Answer 7

Systematic

Question 8

______ _____ sampling uses a classification system to separate the population into smaller groups based on one or more distinguishing characteristics.

Answer 8

Stratified random

Question 9

_____ _____ is often used in bond indexing because of the difficulty and cost of completely replicating the entire populationof bonds.

Answer 9

Stratified sampling

Question 10

In _____ sampling, we are assuming that each subset is representative of the overall population with respect to the item we are sampling.

Answer 10

Cluster

Question 11

In _____ cluster sampling, a random sample of clusters is selected and all the data in those clusters comprise the sample.

Answer 11

One-stage

Question 12

In _____ cluster sampling, random samples from each of the selected clusters comprise the sample.

Answer 12

Two-stage

Question 13

_____ cluster sampling can be expected to have greater sampling error than one-stage cluster sampling.

Answer 13

Two-stage

Question 14

Lower cost and less time required to assemble the sample are the primary advantages of _____ sampling

Answer 14

Cluster

Question 15

_____ sampling may be most appropriate for a smaller pilot study.

Answer 15

Cluster

Question 16

_____ sampling refers to selecting sample data based on its ease of access, using data that are readily available.

Answer 16

Convenience

Question 17

_____ sampling refers to samples for which each observation is selected from a larger data set by the researcher, based on her experience and judgment.

Answer 17

Jugmental

Question 18

Central limit theorem: If the sample size n is sufficiently large (n ≥ _____ ), the sampling distribution of the sample means will be approximately normal.

Answer 18

30

Question 19

Formula: The variance of the distribution of sample means (central limit theorem)

Answer 19

Question 20

Formula: The standard error of the sample mean when the standard deviation of the population, σ, is known.

Answer 20

Question 21

Formula: The standard error of the sample mean when the standard deviation of the population, σ, is unknown.

Answer 21

Question 22

The value of the standard error of the sample mean _____ from as the sample size _____.

Answer 22

Decreases, increases

Question 23

Name the three (3) desirable properties of an estimator.

Answer 23

Unbiasedness, efficiency, consistency

Question 24

An _____ estimator is one for which the expected value of the estimator is equal to the parameter you are trying to estimate.

Answer 24

Unbiased

Question 25

An _____ estimator is one for which the variance of its sampling distribution is smaller than all the other unbiased estimators of the parameter you are trying to estimate.

Answer 25

Efficient

Question 26

_____ _____ are single (sample) values used to estimate population parameters.

Answer 26

Point estimates

Question 27

A _____ _____ is a range of values in which the population parameter is expected to lie.

Answer 27

Confidence interval

Question 28

In the context of confidence intervals, α is called _____ .

Answer 28

Level of significance

Question 29

In the context of confidence intervals, α-1 is called _____ .

Answer 29

Degree of confidence

Question 30

A _____ is usually constructed by adding or subtracting an appropriate value from the point estimate

Answer 30

Confidence interval

Question 31

In the context of confidence intervals, Zα/2 is called _____ .

Answer 31

Reliability factor

Question 32

For a 90% confidence intervals, the reliability factor is equal to _____.

Answer 32

zα/2 = 1.645

Question 33

For a 95% confidence intervals, the reliability factor is equal to _____.

Answer 33

zα/2 = 1.960

Question 34

For a 99% confidence intervals, the reliability factor is equal to _____.

Answer 34

zα/2 = 2.575

Question 35

'’After repeatedly taking samples of CFA candidates, administering the practice exam, and constructing confidence intervals for each sample’s mean, 99% of the resulting confidence intervals will, in the long run, include the population mean.’’

This is an example of a _____ interpretation.

Answer 35

Probabilistic

Question 36

'’We are 99% confident that the population mean score is between 73.55 and 86.45 for candidates from this population.’’

This is an example of a _____ interpretation.

Answer 36

Practical

Question 37

If the population has a normal distribution with a known variance, a confidence interval for the population mean is built using the _____ -statistic.

Answer 37

z-statistic

Question 38

If the population has a normal distribution with a unknown variance, a confidence interval for the population mean is built using the _____ -statistic.

Answer 38

t-statistic

Question 39

Name the two steps to finding a t-value in a table.

Answer 39

1. Compute the degrees of freedom (n – 1)
2. Find the appropriate level of alpha or significance (one-tailed test: α ; two-tailed test: α/2)

Question 40

We cannot create a confidence interval if the distribution is _____ and the sample size is _____.

Answer 40

Non-normal, less than 30

Question 40

We cannot create a confidence interval if the distribution is _____ and the sample size is _____.

Answer 40

Non-normal, less than 30

Question 41

The resampling method in which we calculate multiple sample means, each with one of the observations removed from the sample is called _____.

Answer 41

Jackknife

Question 42

The resampling method in which we draw repeated samples of size n from the full data set and directly calculate the standard deviation of these sample means as our estimate of the standard error is called _____.

Answer 42

Bootstrap

Question 43

Name the two potential limitations of larger sample sizes.

Answer 43

1. May contain observations from a different population (distribution) and reduce the precision of our population parameter estimates
2. Higher cost

Question 44

The bias in which analysts repeatedly use the same database to search for patterns or trading rules until one that “works” is discovered is called _____.

Answer 44

Data snooping

Question 45

The bias which occurs when some data is systematically excluded from the analysis, usually because of the lack of availability is called _____.

Answer 45

Sample selection bias

Question 46

Most mutual fund databases only include funds currently in existence. They do not include funds that have ceased to exist due to closure or merger.

This is an example of the _____ bias.

Answer 46

Survivorship

Question 47

The _____ bias occurs when a study tests a relationship using sample data that was not available on the test date.

Answer 47

Look-ahead

Question 48

The _____ bias can occur if the time period over which the data is gathered is either too short or too long.

Answer 48

Time-period