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Question of the Week - Quantitative Methods
An analyst samples random stocks from the market using the simple random sampling method. The first stock sampled returned 10% in 2012, and the mean 2012 return of the analyst's entire sampled portfolio is 14%. If the market return in 2012 was 16%, the absolute value of the analyst's sampling error is closest to:
Question of the Week - Quantitative Methods 36 votes
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Comments
The sampling error is the difference between the observed value and the value it was intended to represent. In this case, the observed value was the mean return, or 14%. The actual mean return was 16%, so the sampling error was 2%.
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