Credit That Does Not Require Any Collateral to Protect the Payment

question 52

Multiple Choice

Credit that does not require any collateral to protect the payment of the debt is referred to as ________.

• A) unsecured credit
• B) secured credit
• C) fair credit
• D) equal credit

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Definitions:

Representativeness Heuristic

A cognitive bias in decision-making where the likelihood of an event is estimated based on how much it resembles existing stereotypes or patterns.

Availability Heuristic

A cognitive bias where people overestimate the importance or frequency of information that is readily available to them.

Anchoring and Adjustment Heuristic

A mental shortcut that influences the way people intuitively assess probabilities and make decisions based on initial information.

Escalation of Commitment

The phenomenon of investing increasingly more resources into a failing course of action due to cognitive biases and sunk costs.