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What is the purpose of using stratified sampling approach in this scenario?

1) To draw conclusions about the relationship between return on equity and advertising expenditures
2) To ensure that companies with different profitability levels are adequately represented in the sample
3) To analyze the impact of advertising expenditures on return on equity
4) To compare the profitability levels of different companies

User Adyt
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Final answer:

The purpose of stratified sampling in this context is to ensure that companies of different profitability levels are adequately represented in the sample, thus maintaining the validity of the analysis. The correct answer is option 2.

Step-by-step explanation:

The purpose of using a stratified sampling approach in this scenario is to ensure that companies with different profitability levels are adequately represented in the sample. This stratification ensures the validity of any conclusions drawn from the analysis, as it guarantees that each subgroup of the population will be properly accounted for in the sample.

When analyzing the relationship between return on equity and advertising expenditures, it's important that the sample of companies reflects the entire spectrum of profitability. This is essential because if the sample only consisted of highly profitable companies, it may lead to biased results, unduly suggesting a stronger relationship than actually exists for the entire population. Similarly, a sample limited to less profitable companies could downplay the relationship. Stratified sampling addresses this concern by selective sampling from each stratum of profitability.

In summary, the correct option that describes the purpose of using stratified sampling in this context is Option 2.

User Krugloid
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