Use the Below Payoff Table with Four Mortgage Options to Answer

question 67

Multiple Choice

Use the below payoff table with four mortgage options to answer the following question(s) .
-Which of the following decisions has the best average payoff?

• A)1-year ARM
• B)3-year ARM
• C)5-year ARM
• D)30-year fixed

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Definitions:

Poor Information

Refers to scenarios where the data available for decision making is inadequate, inaccurate, or misleading.

Overall Set

The complete or total collection of elements, items, or objects under consideration.

Anchoring

The tendency people have to unconsciously base, or “anchor,” the valuation of an item they are currently thinking about on recently considered but logically irrelevant information.

Irrelevant Information

Information that has no bearing on the decisions being made, providing no value to the decision-making process.