Individuals Often Rely on Cues and Instincts to Make Decisions

question 9

Multiple Choice

Individuals often rely on cues and instincts to make decisions, rather than on an analysis of detailed information. Scholars have termed such thinking as which of the following?

• A) Self-interest rationalization
• B) Low attention span
• C) High attention syndrome
• D) Low information rationality
• E) High information rationality

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Definitions:

Systematic Risk

The risk inherent to the entire market or market segment, often impossible to mitigate through diversification alone.

Unsystematic Risk

Unsystematic risk, also known as company-specific risk or idiosyncratic risk, is the type of uncertainty that comes with a company or industry that can be mitigated through diversification.

Weights

In finance, it refers to the proportional factors assigned to different components of a portfolio or capital structure.

Expected Return

The weighted average of all possible returns from an investment, accounting for the probability of each outcome.