An Action That Makes Otherwise Empty Threats or Promises Credible

question 111

Multiple Choice

An action that makes otherwise empty threats or promises credible is called a:

• A)Nash equilibrium.
• B)commitment device.
• C)strategic device.
• D)dominant strategy.

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Definitions:

Neglected-firm Effect

The phenomenon where lesser-known or less-followed stocks generate higher abnormal returns than their well-followed counterparts.

Excess Returns

The return on an investment that exceeds a benchmark or risk-free rate, indicating the additional compensation for taking on risk.

Passive Fixed-income Indexes

Indexes that track a set of fixed-income securities, used as benchmarks for passive bond investment strategies.

Actively Managed Bond Funds

Bond investment funds where fund managers actively make decisions on buying and selling bonds to outperform the market or reach specific investment goals.