Sometimes One Is Prone to Judge an Individual Based on One's

question 54

Multiple Choice

Sometimes one is prone to judge an individual based on one's notion of the category of people he or she most closely resembles. When this happens, one falls prey to the:

• A)representativeness heuristic.
• B)means-end effect.
• C)confirmation bias.
• D)availability heuristic.

---

Definitions:

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, often represented by the yield on government bonds like U.S. Treasury notes.

Expected Rate

The rate of return anticipated on an investment or asset based on historical data or specified models.

CAPM

Capital Asset Pricing Model, a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Risk Premium

An expected return in excess of that on risk-free securities. The premium provides compensation for the risk of an investment.