NARRBEGIN: Stock Returns -What Is the Average Return of a Portfolio That Has

question 11

Multiple Choice

NARRBEGIN: Stock Returns

-What is the average return of a portfolio that has 30% invested in stock A,30% invested in stock B and 40% invested in stock C?

• A) 9.92%
• B) 12.6%
• C) 7.59%
• D) 13.8%

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Definitions:

Heuristic

A problem-solving approach that employs a practical method not guaranteed to be perfect, but sufficient for reaching an immediate goal.

Fixedness

A cognitive bias that limits a person to using an object only in the way it is traditionally used, hindering problem-solving and creativity.

Representativeness Heuristic

A mental shortcut that involves making a probability judgment by comparing an object or event to a prototype of the object or event.

Availability Heuristic

A cognitive bias that causes people to overestimate the importance of information that is readily available to them.