Which of the Following Is True About Groupthink

question 46

Multiple Choice

Which of the following is true about groupthink?

• A)Highly cohesive groups always have moderate levels of confidence in their decisions.
• B)Highly cohesive groups always produce better decisions than moderately cohesive groups.
• C)Moderately cohesive groups tend to produce better decisions than high-cohesive groups.
• D)Highly cohesive groups typically produce better decisions than low-cohesive groups.
• E)Groups with low cohesiveness tend to produce better decisions than moderately-cohesive groups.

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Definitions:

Certainty Equivalent Approach

A method to evaluate risk where uncertain future cash flows are converted into certain cash flows under the assumption of risk neutrality.

Risk-Free Rate

The interest rate excluding all risk premiums. The risk-free rate consists of the pure rate and an inflation adjustment. It is approximated by the three-month treasury bill rate. Written as kRF.

Real Option

The value of additional decision-making opportunities available to an investor or company once an initial investment has been made.

Financial Results

The summary of a company's financial performance and position, typically reported on a quarterly and annual basis.