When Mandy and Joe Meet,Joe Tells Her That He Loves

question 39

Multiple Choice

When Mandy and Joe meet,Joe tells her that he loves math and computers and his favorite hobbies have always involved building things.Mandy concludes that Joe must be an engineering student rather than a liberal arts student,even though there are many more liberal arts than engineering students at their school.Mandy is using the _____ heuristic and ignoring _____.

• A) representativeness; base rates
• B) availability; base rates
• C) representativeness; subjective likelihood
• D) availability; subjective likelihood

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Definitions:

Default Risk

The risk associated with a borrower failing to make required payments on a debt they owe.

Bond Agreement

A legal contract between the bond issuer and the bondholders, outlining the terms of the bond such as the interest rate, maturity date, and obligations of the issuer.

Treasury Securities

Government-issued debt instruments used to finance government spending as an alternative to taxation.

Maturity Risk

The risk that arises from the length of time until the principal amount of a fixed-income investment becomes due and payable, affecting the investment's exposure to interest rate changes.