Suppose a Teacher Hears from the Principal at the Start

question 37

Multiple Choice

Suppose a teacher hears from the principal at the start of the school year that an especially "weak" student will be admitted to their class.From September to October,the teacher indeed sees that this student struggles with assignments.In November,the principal states that the student admitted to the class was actually quite strong.But even after knowing this,the teacher still grades the student poorly.This is an example of

• A)the representativeness heuristic.
• B)the hindsight bias.
• C)belief perseverance.
• D)the availability heuristic.

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Definitions:

Net Operating Income

A measure of a company's profitability, calculated as the difference between its total revenue and operating expenses, excluding taxes and interest.

Return On Investment

A financial ratio used to calculate the profitability of an investment, comparing the gain from an investment relative to its cost.

Residual Income

The income that remains after subtracting from the net operating income the cost of capital charged for utilizing the capital in generating the net operating income.

Minimum Required Rate

The lowest acceptable rate of return on an investment, often used in the context of capital budgeting.