Illusory Correlation Is

question 78

Multiple Choice

Illusory correlation is

• A) the illusion that family relationships will be harmonious at some time in the future.
• B) a cognitive process that allows people to believe that relationships exist when they do not.
• C) similar to stereotyping but less harmful.
• D) a learned set of behaviors that relate to cognitive development during middle childhood.

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Definitions:

Modigliani

Franco Modigliani, an economist known for his work in corporate finance, especially the Modigliani-Miller theorem regarding capital structure and the dividend irrelevance theory.

Miller

Often refers to a person who operates a mill, a machine to grind a cereal crop to make flour.

Risk

The exposure to potential financial loss or gain, often evaluated in decisions involving investment or finance.

Leverage

The strategy of using borrowed money to increase the potential return of an investment.