Question

The commercial banks in Region II are to be surveyed. Some of them are very large, with assets of more than $500 millions; others are medium sized, with assets between $100 millions and $500 millions. Explain how you would select a sample of these banks

Answer 1

We have to perform stratified random sampling. To do so we have to proceed as follows.

1. We have to divide all banks into two homogeneous strata. One consisting banks with assets of more than $500 millions while another consisting banks with assets between $100 millions and $500 millions.
2. We have to obtain population size of each strata.
3. Based on requirements we have to do any of (i) equal allocation, (ii) proportional allocation or (iii) Neyman allocation.
4. With number of banks to be surveyed (as calculated in part 3) of each strata, we have to pick that number of banks from each strata using simple random sampling.