Karilynn's Professor Poses the Following Question to the Psychology Class

question 16

Multiple Choice

Karilynn's professor poses the following question to the psychology class: "When it comes to achieving our goals, is it better to focus on how far we still have to go before we reach a goal, or should we focus on what we have already accomplished?" Karilynn immediately asks herself whether there is any theory or empirical evidence to support stressing either a goal focus or an accomplishment focus. She also wonders what research method could be used to find out this information if no empirical evidence presently exists. Karilynn is exhibiting

• A)critical thinking.
• B)transductive reasoning.
• C)commonsense reasoning.
• D)intuitive thinking.

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Definitions:

Diversifiable Risk

A type of risk that can be reduced or eliminated from a portfolio through investments in a variety of assets, also known as unsystematic risk.

Arbitrage Pricing Model

A theory for asset pricing that takes into account multiple risk factors and the return of an asset, assuming no arbitrage opportunities.

Characteristic Line

In finance, this is a line generated in a statistical plot to describe how the returns of a security relate to the returns of the overall market, used in the Capital Asset Pricing Model (CAPM).

Market Risk

The risk of losses in investments due to factors that affect the entire market, such as economic recessions or political instability.