You Have Been Given Funding for an Assistant Manager in Your

question 44

Multiple Choice

You have been given funding for an assistant manager in your department.During the interview process,you find someone who graduated from the same university as you did,played the same sports as you did,and was a member of a greek organization just as you were.If you decide to hire this candidate,which of the selection problems have you perhaps failed to avoid?

• A)rushing
• B)stereotyping
• C)"like me" syndrome
• D)halo and horn effect

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Definitions:

Mispriced Securities

Mispriced Securities are financial instruments that have a market price significantly different from their intrinsic value.

Efficient Market Hypothesis

A theory that suggests all known information is already reflected in stock prices; therefore, it is impossible to consistently achieve higher returns than the overall market.

Nonzero Alphas

Refers to the active return on an investment, indicating performance that deviates from the expected risk-return trade-off.

Neglected-firm Effect

A phenomenon where lesser-known, smaller companies may outperform larger companies because they receive less attention from analysts.