What Is the Benefit of Using "Fast and Frugal Heuristics

question 52

Multiple Choice

What is the benefit of using "fast and frugal heuristics"

• A) We tend to have greater confidence in decisions made that way. 
• B) We make more accurate decisions than when we use careful reasoning. 
• C) There are few benefits to the use of those heuristics, as decision making tends to be very flawed when done rapidly. 
• D) We can make decisions very quickly.

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Definitions:

Treynor Measure

A performance metric for determining how well an investment compensates the investor for taking risk, calculated as the excess return over the risk-free rate relative to the beta of the portfolio.

Beta

A means to evaluate the fluctuation, or inherent risk, of a security or portfolio against the aggregate market.

S&P 500 Index

A stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States, often used as a benchmark for the overall market.