The ________ Is the Rule of Thumb According to Which

question 39

Multiple Choice

The ________ is the rule of thumb according to which people's belief about the likelihood that something belongs to a given category increases with the extent to which it shares characteristics with the stereotypical members of that category.

• A)representative heuristic
• B)adaptive rationality standard
• C)availability heuristic
• D)Weber-Fechner law

---

Definitions:

Arbitrage Opportunities

The chance to buy an asset at a low price in one market and simultaneously sell it at a higher price in another market, earning a risk-free profit.

Expected Returns

The average return an investor anticipates on an investment, based on historical data, projected performance, and market analysis.

Factor Portfolio

A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of 0 on any other factor.

Well-Diversified Portfolio

A portfolio that contains a wide variety of investments across multiple asset classes to reduce risk.