In Which of the Following Situations Would the Use of Sampling

question 73

Multiple Choice

In which of the following situations would the use of sampling be most appropriate?

• A)The need for precise information is less important.
• B)The number of items comprising the population is smaller.
• C)The likelihood of selecting a representative sample is relatively low.
• D)The use of sampling would be appropriate in all of the above situations.

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Definitions:

Macaulay Duration

A measure of the weighted average time until all cash flows from a bond are received, used to gauge a bond's interest rate sensitivity.

Yield To Maturity

A measurement of the annual return an investor can expect from a bond if held to its end date, factoring in its price, interest payments, and time to maturity.

Zero-Coupon Bond

A bond that does not pay periodic interest payments but is sold at a deep discount from its face value and pays its full face value at maturity.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, often used as an indication of interest rate risk.