Linda Wants to Purchase a New Car

question 44

Multiple Choice

Linda wants to purchase a new car. She visits a few of the car showrooms in her city to select the brand of car that would be affordable to her as well as the one that she will be proud to own. After careful research, she decides to choose a car manufactured by a local brand. Although Linda had the option to choose cars from foreign brands that were priced much lesser than the car she chose from the local brand, she preferred the car from the local brand to the car from the foreign brand. The approach shown by Linda in this scenario exemplifies a(n) _____.

• A) ethnocentrism bias
• B) neglecting probability bias
• C) observational selection bias
• D) confirmation bias

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Definitions:

Premium On Bonds Payable

The excess amount by which bonds are sold over their face value, indicating investors’ willingness to pay more for certain bonds.

Bond Interest Expense

Bond interest expense is the cost incurred by an issuer of bonds for paying interest to the bondholders, typically recognized in the income statement.

Amortization

The gradual reduction of a debt over a period of time through regular payments that cover principal and interest.

Semiannually

Occurring twice a year or every six months.