The Misinformation Effect Refers to the

question 33

Multiple Choice

The misinformation effect refers to the

• A) tendency to recall experiences that are consistent with one's current good or bad mood.
• B) disruptive effect of prior learning on the recall of new information.
• C) the eerie sense that "I've been in this exact situation before."
• D) incorporation of misleading information into one's memory of an event.

---

Definitions:

Market Risk Premium

Slope of the Security Market Line; the difference between the expected return on a market portfolio and the risk-free rate.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements and can finance its operations.

Risk-Free Rate

The return on an investment with zero risk, typically associated with government bonds.

Market Risk Premium

The Market Risk Premium is the additional return an investor expects from holding a risky market portfolio instead of risk-free assets.