Knowledge-Based Trust Is Grounded in Behavioral Predictability and It Occurs

question 12

Multiple Choice

Knowledge-based trust is grounded in behavioral predictability and it occurs when a person has enough information about others to understand them and accurately predict their behavior.Whenever informational uncertainty or asymmetry characterizes a relationship,it provides opportunity for deceit,and one or both negotiators risk ______.

• A)judgment by other parties
• B)being corrupted
• C)exploitation
• D)damaging their reputations

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Definitions:

APT Model

Arbitrage Pricing Theory Model, an alternative to the Capital Asset Pricing Model (CAPM), asserts that the expected return of a financial asset can be modeled as a linear function of various macro-economic factors or theoretical market indexes.

Security Returns

The gains or losses from investing in a security, usually expressed as a percentage of the initial investment.

Arbitrage Opportunities

Situations where a financial instrument, or a combination of financial instruments, can be bought and sold simultaneously in different markets to profit from price discrepancies.