Two common methods for constructing a bond index are

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Full replication involves purchasing all of the bonds in the index, while stratified sampling involves selecting a representative sample of bonds from different sectors and maturities. These two methods are commonly used together to construct a bond index that accurately represents the overall market. Partial replication and overall market approach are not commonly used in bond index construction, and ETFs and high yield sampling are more specific strategies rather than general methods for constructing a bond index. Multiple discriminant analysis and bond swaps are not commonly used in bond indexing either.

Two Common Methods for Constructing a Bond Index Are