Refer to the Information Provided in Scenario 21

question 97

Multiple Choice

Refer to the information provided in Scenario 21.2 below to answer the questions that follow.
SCENARIO 21.2: A survey of 1,000 people in Austin, Texas (population 900,000) found that those who have chosen to eat organic produce for at least the past 5 years have experienced fewer serious medical issues than those who have not elected to eat organic produce. Therefore, the conclusion was made that eating organic produce helps prevent people from experiencing serious medical problems.
-Refer to Scenario 21.1. Which of the following statements pertaining to the scenario is the most accurate with respect to selection bias?

• A) The survey exhibits selection bias in that only 1,000 people were surveyed in a city with a population of 900,000).
• B) The survey exhibits selection bias in that the 5-year time frame used to gauge serious medical issues is not long enough.
• C) The conclusion exhibits selection bias in that there may be other factors, such as those who eat organic produce also exercise on a more regular basis, that could account for fewer serious medical problems.
• D) All of the above are correct.

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Definitions:

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturation date, accounting for interest payments and the difference between purchase price and par value.

Coupon Bond

A type of bond that pays the holder a fixed interest rate (coupon) over its lifetime, and the principal is repaid at maturity.

Interest-Rate Risk

The potential for investment losses due to fluctuations in interest rates.

Yield To Maturity

The total return anticipated on a bond if held until its maturity date, taking into account its current market price, par value, coupon interest rate, and time to maturity.