Which of the Following Types of Biases in Decision Making

question 46

Multiple Choice

Which of the following types of biases in decision making represents the tendency of decision makers to prefer a sure thing?

• A) hindsight bias
• B) bounded rationality
• C) escalation of commitment
• D) selective perception
• E) risk aversion

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Definitions:

Return On Equity

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how efficiently a company uses its equity investment.

Price/Earnings Ratio

A valuation metric for stocks calculated by dividing the market price per share by the earnings per share, indicating how much investors are willing to pay per dollar of earnings.

Stock Market

A marketplace where shares of public companies are traded between investors.

Receivable Turnover Ratio

A financial metric that measures how efficiently a company collects cash from its customers by comparing net credit sales to average accounts receivable.