The Availability Heuristic Is Based on the Assumption That

question 122

Multiple Choice

The availability heuristic is based on the assumption that

• A) if we ask a question in the proper manner, we will get the correct answer.
• B) if we are not sure whether we are looking at something from category A or category B, it is probably from the more common category.
• C) if we have found much evidence for a hypothesis and no evidence against it, then the hypothesis is probably correct.
• D) if we can easily remember a few examples of some event, then it must be a common event.

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Definitions:

Bond Issue

The process of issuing new bonds by a corporation or government to raise capital, involving the creation of new debt securities to be sold to investors.

Subordinated Debt

A type of borrowing that is ranked below other debts in terms of claims on assets or earnings.

Senior Debt

Debt that takes precedence over other unsecured or junior debt owed by the issuer in terms of the order of payment in the event of a liquidation.

Junk Bond

A high-yield but high-risk bond issued by companies or municipalities considered to be at greater risk of default than more secure investment-grade bonds.