Which of the Following Terms Best Describes the Tendency to Underestimate

question 97

Multiple Choice

Which of the following terms best describes the tendency to underestimate the influence of external factors and overestimate the influence of internal factors when making judgments about the behavior of others?

• A) fundamental attribution error
• B) halo effect
• C) selective perception
• D) overconfidence
• E) randomness error

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Definitions:

ROA

Return on Assets, an indicator of how profitable a company is relative to its total assets, showing how efficient management is at using assets to generate earnings.

ROE

Return on Equity: It's a financial performance indicator that is computed by dividing the net income by the equity held by shareholders.

Equity/Debt Ratio

An economic indicator revealing the balance between shareholder equity and borrowed funds in financing company assets.

Level 3 Assets

These are financial assets and liabilities that are hard to value because they do not have a readily observable market price, often requiring significant estimation in their valuation.