If Your Pattern of Thinking Is That Every Time You

question 17

Multiple Choice

If your pattern of thinking is that every time you get a phone call it will be bad news,then you are making the cognitive error of

• A) graded exposure.
• B) minimization.
• C) arbitrary inference.
• D) cathartic leap.

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Definitions:

November 45 Call

A type of option contract that gives the holder the right, but not the obligation, to buy a stock or another financial instrument at a specified price (in this case, $45) on or before November's expiration date.

Risk-Free Rate Of Return

The assumed rate of return on an investment that carries no risk, typically illustrated by the return on government securities.

Strike Price

The fixed price at which the holder of an option can buy (in the case of a call) or sell (in the case of a put) the underlying asset.

Market Value

The total value of a company, measured through the market price of its outstanding shares.