Riley Has Figured Out How to Unlock His Bedroom Door

question 83

Multiple Choice

Riley has figured out how to unlock his bedroom door with a paper clip. What has he most likely overcome in his new use of the paper clip?

• A) functional fixedness
• B) the representational problem
• C) the representative heuristic
• D) the confirmation bias

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Definitions:

Dollar-Weighted Return

A method of calculating an investment's return that accounts for the timing and amount of cash flows into and out of the investment.

Time-Weighted Return

A measure of the historical performance of an investment portfolio which adjusts for external flows, such as cash injections or withdrawals.

Sharpe Measure

A metric used to assess the performance of an investment by adjusting for its risk, calculated as the difference between the investment's returns and the risk-free return rate, divided by the investment's standard deviation.

Beta

An index for assessing the variation or inherent risk of a security or a portfolio as compared to the aggregate market.