Which of the Following Investment Decision Rules Tends to Improperly

question 23

Multiple Choice

Which of the following investment decision rules tends to improperly reject long-lived projects?

• A)net present value
• B)internal rate of return
• C)payback period
• D)profitability index

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Definitions:

Belief Perseverance

A tendency to continue to view an initial assumption as correct despite evidence to the contradictory.

Self-serving Bias

In attribution, the tendency for people to take personal credit for acts that yield positive outcomes and to deflect blame for bad outcomes by attributing them to external causes.

Fundamental Attribution Error

The tendency to overemphasize personality-based explanations for behaviors observed in others while underestimating the influence of situational factors.

Actor-observer Difference

The tendency to attribute one's own actions to situational factors while attributing others' actions to their personal characteristics.