When Her Professor Failed to Recognize That Judy Had Her

question 15

Multiple Choice

When her professor failed to recognize that Judy had her hand raised for a question, Judy began to think her professor was unfriendly. Although she subsequently learned that the professor's limited vision kept him from seeing her raised hand, she continued thinking the professor was unfriendly. Judy's reaction best illustrates

• A) the framing effect.
• B) belief perseverance.
• C) a critical period.
• D) the availability heuristic.

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Definitions:

Time Value

The idea that having money now is more valuable than having the same amount later on because of its ability to generate earnings over time.

Strike Price

The specified price at which the buyer of an option can buy (call option) or sell (put option) the underlying asset.

Call Premium

The extra amount above the par value that a bond issuer must pay to redeem a bond before its maturity date.

Net Profit

The actual profit after working expenses not included in the calculation of gross profit have been paid.