Bias Can Occur in Sampling

question 103

Multiple Choice

Bias can occur in sampling. Bias refers to ________.

• A) the division of the population into overlapping groups
• B) the creation of strata, which are proportional to the stratum's size
• C) the use of cluster sampling instead of stratified random sampling
• D) the tendency of a sample statistic to systematically over- or underestimate a population parameter

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Definitions:

Nonsystematic Risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk, firm-specific risk, or diversifiable risk. Systematic risk refers to risk factors common to the entire economy.

Diversifiable Risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk, firm-specific risk, or nonsystematic risk. Nondiversifiable risk refers to systematic or market risk.

Market Risk

Also known as systemic risk, it's the potential for investors to experience losses due to factors that affect the overall performance of the financial markets.

Unique Risk

Referred to as unsystematic risk, it denotes the risk linked to a particular company or sector.