Andrew, a Stock Broker at a Leading Investment Firm, Often

question 41

Multiple Choice

Andrew, a stock broker at a leading investment firm, often recommends his clients to invest in stocks based on a few observation.Andrew relies on his instincts to make such decisions, rather than basing his decisions on reliable sources of information and careful number crunching.In this example, Andrew makes which of the following decision biases?

• A)Escalation of commitment
• B)Fundamental attribution error
• C)Misunderstandings about sampling
• D)Availability bias
• E)Judgments about correlation and casualty

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Definitions:

Bond Payable

A long-term debt instrument issued by a company, promising to pay the holder a specified amount of interest over a set period and to repay the principal on the bond's maturity date.

Long-Term

Referring to assets, liabilities, or investments that are expected to be held or mature in more than one year.

Interest-Bearing Note

A promissory note that comes with the agreement to pay the holder a fixed amount of interest over a specified period until the principal amount is repaid.