The Anchoring Tendency Relates To

question 33

Multiple Choice

The anchoring tendency relates to:

• A) Starting from an initial numerical value and then adjusting insufficiently away from it in forming a final judgment
• B) Starting from management's estimate and then adjusting sufficiently away from it in forming a final judgment
• C) Developing a system to give voice to one's values
• D) Developing a decision making framework

Grasp the key functions and roles of traditional managers in organizations.

Learn from successful leadership experiences and strategic planning in organizations.

Know the parameters within which employees accept leaders' directives without questioning (zone of indifference).

Recognize the role of competencies in determining leadership effectiveness according to the Vroom-Jago model.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Straight Bond Value

The value of a bond that pays a fixed interest rate (coupon rate) and does not have any embedded options such as convertibility or callability.

Convertible Bond

A bond that offers the option to be exchanged for a specific quantity of the issuing company's stock at chosen intervals throughout its tenure, generally at the choice of the person holding the bond.

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy an asset at a specified price within a certain period.