You Have Saved a Total of $200,000 Over the Past

question 75

Multiple Choice

You have saved a total of $200,000 over the past several years. Jane, a trusted business associate, recently approached you with an offer. She has offered you a partnership in a new firm that she
Expects to be exceedingly profitable. Your initial investment in the partnership would be $125,000.
However, Jane cannot give you any odds on that success occurring. You have decided to keep your
$125,000 and forego this opportunity simply because you don't know the probability of success.
Which one of the following behavior characteristics do you have?

• A) Aversion to ambiguity.
• B) Recency bias.
• C) Sentiment-based risk aversion.
• D) Clustering illusion.
• E) Money illusion.

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Definitions:

Stockholders' Equity

Stockholders' equity represents the ownership interest of shareholders in the corporation, calculated as total assets minus total liabilities.

Liabilities

Financial obligations or debts that a company owes to external parties.

Cash Dividend

A cash dividend is a payment made by a company out of its earnings to shareholders in the form of cash.

Stockholders Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership value.