If Asked, "Which Is More Probable? A

question 197

Multiple Choice

If asked, "Which is more probable? A. Tiger Woods will not be in the lead after the first round of golf of a tournament but will win the tournament. B. Tiger Woods will not be in the lead after the first found of golf of a tournament." Most people would answer A, although A is less likely to be true than B. According to Tversky and Kahneman, such faulty conclusions are based on

• A) the framing effect.
• B) convergent thinking.
• C) divergent thinking.
• D) the representativeness heuristic.

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Definitions:

Income Tax

Taxes levied by the government on the income generated by businesses and individuals.

Stockholders

Individuals or entities that own shares in a corporation, also commonly referred to as shareholders.

Borrowed Money

Funds that are obtained through loans or credits, which must be repaid with interest.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, including issuing debt, issuing equity, and paying dividends.