What Is the One Acute Problem of Dichotomous Questions

question 27

Multiple Choice

What is the one acute problem of dichotomous questions?

• A)There is potential for position bias.
• B)It is difficult to obtain information on alternatives not listed.
• C)The response can be influenced by the wording of the question.
• D)none of the above

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Definitions:

Equity Tranche

The portion of a structured finance instrument that is first to absorb losses and last to receive payments.

Default

Failure to fulfill a legal obligation, especially failure to meet a debt payment or not fulfilling a contract condition.

Collateralized Debt Obligation

A complex structured finance product that pools together cash flow-generating assets and repackages them into tranches for sale to investors.

Credit Default Swap

A financial derivative or contract that allows an investor to "swap" or offset their credit risk with that of another investor.