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New Mexico National Bank

New Mexico National Bank (NMNB) operates branches in 23 cities and towns throughout the state of New Mexico. The bank offers a complete range of fi nancial services, including Visa and MasterCard credit cards. NMNB has 53,400 people in the state using its credit cards. Based on their original applications, the bank has certain information about these individuals, including name, address, zip code, telephone number, income, education, and assets. NMNB is interesting in determining whether a relationship exists between the volume of purchases charged on credit cards and the demographic characteristics of the individual cardholders. For example, are individuals in certain parts of the state more or less likely to be heavy users of the card? Is there a relationship between a person’s income and his or her level of card usage? Is there a relationship between the person’s level of education and card usage? The data can be used to more effectively target offering sent through the mail if signifi cant relationships are found. Paul Bruney, research director for NMNB, is in the process of developing a design for the research. If you were Paul Bruney, how would you answer the following questions?

Questions 1. How would you defi ne the population of interest for the study?

2. What sampling frame(s) might you use for the project?

 3. What procedure would you use to select a simple random sample from the sampling frame you chose above?

 4. Would it make sense to use a stratifi ed sample in the situation? Why or why not? How would you approach the process of developing a stratifi ed sample from the sampling frame you chose?

5. Could you use the sampling frame to draw a cluster sample? How would you go about it? Would it make any sense to do this?

 6. Which of the three probability sampling methods just mentioned would you choose for this study? Why would you choose that option?