When Comparing the Standard Models in the Respective Fields of Economics

question 4

Multiple Choice

When comparing the standard models in the respective fields of economics and psychology,it is clear that

• A) both economists and psychologists always assume that people always behave in a fully rational way.
• B) both economists and psychologists always assume that people do not act in a fully rational way.
• C) neither economists nor psychologists always assume that people always behave in a fully rational way.
• D) economists generally assume that people always behave in a rational way,whereas psychologists generally do not.
• E) psychologists generally assume that people always behave in a rational way,whereas economists generally do not.

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Definitions:

Premium Amortized

The process of gradually writing off the initial cost of a premium over the period of the bond to match it with the interest earned.

Interest Cost

The cost incurred by an entity for borrowing funds, essentially the price paid for the use of borrowed money.

Bonds Issued

Debt securities sold by corporations or governments to investors to raise capital, requiring periodic interest payments and repayment of principal at maturity.

Bonds at Discount

Bonds issued below their face value, where the difference between the issue price and the face value represents the interest.