Confirmation Bias Refers to the Tendency to

question 21

Multiple Choice

Confirmation bias refers to the tendency to

• A) allow preexisting beliefs to distort logical reasoning.
• B) cling to one's initial conceptions after the basis on which they were formed has been discredited.
• C) search randomly through alternative solutions when problem solving.
• D) look for information that is consistent with one's beliefs.

---

Definitions:

Futures Market

A marketplace where individuals have the opportunity to trade standardized contracts for futures, which are agreements to purchase predetermined amounts of a commodity or financial instrument at an agreed-upon price, with the delivery scheduled for a future date.

CAPM

Capital Asset Pricing Model, a theory used to determine the expected return on investment by correlating the risk of an asset to its expected return.

Exchange Rate

The rate at which one currency can be exchanged for another, usually used in the context of foreign exchange markets.

Firm's Beta

A measure of a company's stock volatility compared to the market as a whole, indicating its relative risk.