Marcus Heard on the Radio That There Is a 50

question 36

Multiple Choice

Marcus heard on the radio that there is a 50% chance of rain today. Janis heard that there was 50% of clear skies. Who is more likely to believe that it will not rain today and why?

• A) Janis because of a belief bias effect
• B) Janis because of a framing effect
• C) Marcus because of confirmation bias
• D) Janis because of availability
• E) both equally because of inductive reasoning

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Definitions:

Flotation Costs

Expenses incurred by a company in issuing new securities, including legal, administrative, and underwriting fees.

Constant Rate

A fixed percentage or value that does not change over a specified period of time, often used in financial formulas to calculate growth or decay.

Retained Earnings

The portion of net income not distributed to shareholders but instead reinvested in the business or used to pay off debt.

Common Equity

Represents the stockholders' equity or the amount available to common shareholders as a portion of the net worth of a company.