Malcolm Has Been Watching a Roulette-Type Game at a Local

question 229

Multiple Choice

Malcolm has been watching a roulette-type game at a local charity bazaar.The game has only ten numbers on the wheel,and every number except 8 has come up as a winner during the last 15 minutes.Malcolm decides to bet $10 on number 8,because it has to come up eventually.In this case,Malcolm is showing evidence of

• A) the availability heuristic.
• B) the gambler's fallacy.
• C) the base rate fallacy.
• D) the conjunction fallacy.

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Definitions:

Compounded Semiannually

The process of applying interest to both the initial principal and accumulated interest over two periods within a year.

Present Value

The valuation today of a future financial sum or series of cash movements, taking into account a predetermined return rate.

Future Value

The estimated value of a current asset or amount of money at a specified date in the future, taking into account factors like interest rates or stock growth.

Present Value

The present-day valuation of a future sum of money or cash flow series, assuming a particular rate of earnings.