(Stratified) Random Sampling

CFA Level I Quant
#1

Hey guys,

I just did the following question and now I am confused whether my understanding of stratified sampling is incorrect.

An analyst decides to select 5 stocks for his portfolio by placing the ticker symbols for all the stocks of the NYSE in a large bowl. He randomly selects 5 of these stocks. The analyst used:

A) Dual random sampling

B) simple random sampling

C) stratified random sampling

B) is correct.

I re-read the learning objective but I am still unsure about the following: arent the stocks of the NYSE already a stratum of all the stocks globally available? If yes, we would have a stratified sample and the solution would bei c)…

What am i missing here?

#2

it would be stratified if he had placed e.g. all the Small company stocks in 1 bowl, Medium in another and so on…

picked a bowl at random

and then picked 5 out of that bowl.

(Low, Medium High were based on certain parameters)

he had created “strata”

and then picked the sample from those “strata”

#3

I think I got it now. Great, thank you very much, cpk123! :slightly_smiling_face:​​​