Which of the Following Should Be Accounted for in a Permanent

question 122

Multiple Choice

Which of the following should be accounted for in a permanent fund?

• A) A gift of $100,000 to a school board, to be given out $10,000 a year to the class valedictorian as a college scholarship
• B) A gift of $100,000 to a city, to be expended next year to purchase books for the city library
• C) A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be used to distribute to various nonprofit groups
• D) A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city war memorials

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Definitions:

Availability Heuristic

A strategy in which one estimates the frequency or probability of an event by the ease with which mental operations, such as retrieval of examples and construction of examples, can be carried out.

Frequency

In general terms, it refers to how often something occurs within a specific interval or context, such as the number of repetitions of a wave per second in physics.

Expected Utility Theory

A normative model of decision making in which the decision maker weighs the personal importance and probabilities of different outcomes in choosing among alternatives in order to maximize overall satisfaction of personal goals.

Prescriptive

Relating to the imposition or enforcement of rules, norms, or recommendations, often in a directive way.