Random sample

Sample of n elements selected from a population of A? elements in such a way that the sample has essentially the same char­acteristics as the population. The random sample serves as the founda­tion of all probability theory as it relates to probability in sampling. In theory, all subsets drawn from the same sample have an equal chance of being drawn. Sampling is extremely important to the calculation of premium rates. For example, if the insurer wants to predict the proba­bility that a wood-frame house will burn, the sample must be drawn from the population of wood-frame houses, not brick-frame houses.

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