Which of the Following Is the LEAST Likely Explanation for a Firm's

question 60

Multiple Choice

Which of the following is the LEAST likely explanation for a firm's high ROE?

• A)The firm has very efficient use of its assets.
• B)The firm is growing.
• C)The firm is able to find investment opportunities that are very profitable.
• D)The firm enjoys high sales margins.

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Definitions:

Reconstruction Bias

a type of cognitive bias that involves memory errors in which individuals may add or omit details in their recollection of events.

Overconfidence Bias

The tendency to hold a subjective belief unreasonably confidently, making someone believe their ability, or the accuracy of their information, is higher than it actually is.

Confirmation Bias

The bias towards finding, interpreting, selecting, and recollecting evidence in ways that validate one's prior beliefs or notions.

Hindsight Bias

The tendency to believe, after learning an outcome, that one would have foreseen it, known also as the "I-knew-it-all-along" effect.