We Often Make Decisions Based on the Ease with Which

question 68

Multiple Choice

We often make decisions based on the ease with which information "comes to mind." Which heuristic does this refer to?

• A) availability
• B) representativeness
• C) decision making
• D) functional fixedness

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Definitions:

Default Risk

The risk associated with a borrower failing to make required payments on debt.

Liquidity Risk

The risk that an entity will not be able to meet its financial obligations as they come due because it cannot convert assets to cash quickly.

Deferred Consumption Risk

The risk associated with postponing consumption today in order to invest, with the potential of not having enough resources in the future.

Liquidity Risk

The risk that an entity will not be able to meet its short-term financial obligations due to the inability to quickly convert assets to cash without significant loss.