Provide an Appropriate Response

question 91

Essay

Provide an appropriate response.
-List two reasons it is better to sample without replacement when testing batches of products. When sampling without replacement, should you use the multiplication rule for independent or dependent events? Explain your answer.

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Definitions:

Covariance

A measure of the degree to which returns on two risky assets move in tandem. A positive covariance means that asset returns move together. A negative covariance means they vary inversely.

Variance

A measure of the dispersion of a random variable. Equals the expected value of the squared deviation from the mean.

Fairly-Priced Securities

Securities that are believed to be priced appropriately according to their risk level and the expected rate of return.