Amy is the chief financial officer of a retail toy store. Recently, she decided that the firm should expand its operations

1.

Amy is the chief financial officer of a retail toy store. Recently, she decided that the firm should expand its operations and open two additional stores. Within a very brief period, it was obvious that Amy had made a very bad decision in opening those stores, given that the economy is in the middle of a severe recession. In reflecting back on her decision, Amy realizes that she made a bad decision due to a reasoning error. Which one of the following areas of study best applies to this situation?    A.  corporate ethics B.  financial statement analysis C.  managerial finance D.  debt management E.  behavioral finance Refer to section 22.1

2.

Peter has successfully managed the finances of A.D. Leadbetter in a manner that has yielded abnormally high returns. Due to this success, Peter has decided to publish a newsletter for financial executives so that he can share his superior financial wisdom with others. There is a very real probability that Peter has which one of the following characteristics?    A.  gambler's fallacy B.  frame dependence C.  overconfidence D.  representativeness heuristic E.  sentiment-based risk attitudes Refer to section 22.2

3.

Anytime Ted analyzes a proposed project, he always assigns a much higher probability of success to the project than is warranted by the information he has gathered. Ted suffers from which one of the following?    A.  frame dependence B.  overconfidence C.  gambler's fallacy D.  confirmation bias E.  overoptimism Refer to section 22.2

4.

The tendency for a decision maker to search for confirmation that a recent decision he or she made was a good decision represents which one of the following characteristics?    A.  overconfidence B.  overoptimism C.  affect heuristic D.  confirmation bias E.  representativeness heuristic Refer to section 22.2