The Way a Question Is Stated Before Problem Solving Begins

question 45

Multiple Choice

The way a question is stated before problem solving begins can affect decision making and is known as

• A)the representativeness heuristic.
• B)framing.
• C)incubation.
• D)defining the base rate.

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Definitions:

Total Debt Ratio

A financial metric that compares the total liabilities of a company to its total assets, indicating how much of the company's assets are financed by debt.

Total Equity

The total net worth of a company as calculated by subtracting total liabilities from total assets, representing the owners' stake in the company.

Times Interest Earned Ratio

A metric used to measure a company's ability to meet its interest payments, calculated as earnings before interest and taxes divided by interest expense.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if a stock is over or under-valued.