Errors That People Make Over and Over and That Result

question 49

Multiple Choice

Errors that people make over and over and that result in poor decision making are known as:

• A)recency effect
• B)illusion of control and overconfidence bias
• C)confirmation bias
• D)representative bias
• E)systematic errors

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Definitions:

Return on Equity

Return on Equity (ROE) measures the rate of return that the owners of common stock of a company receive on their shareholdings, reflecting the efficiency with which their capital is utilized.

Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity used to finance a company's assets.

Total Asset Turnover

A financial metric that measures a company's efficiency in using its assets to generate revenue.

Stretching Payables

Extending the period to pay bills as long as possible without incurring penalties, to improve short-term liquidity.