Describe the Major Tools and Criteria for Decision Making -What Is the Average Payoff for the 5-Year ARM?
A)

question 30

Multiple Choice

Describe the major tools and criteria for decision making. Use the information below to answer the following question(s) . Below is a payoff table that lists four mortgage options: $$\begin{array} { | l | l | l | l | } \hline &{ \text { Outcome } } \\\hline \text { Decision } & \text { Rates Rise } & \text { Rates Stable } & \text { Rates Fall } \\\hline \text { 1-year ARM } & \$ 66,645 & \$ 43,650 & \$ 38,560 \\\hline \text { 3-year ARM } & \$ 62,857 & \$ 47,698 & \$ 42,726 \\\hline \text { 5-year ARM } & \$ 55,895 & \$ 50,894 & \$ 48,134 \\\hline \text { 30-year fixed } & \$ 52,276 & \$ 52,276 & \$ 52,276 \\\hline\end{array}$$
-What is the average payoff for the 5-year ARM?

• A) $ 49,514
• B) $ 52,015
• C) $ 53,395
• D) $ 51,641

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Definitions:

Basalts

Dark, fine-grained volcanic rock formed from the rapid cooling of low-viscosity lava rich in magnesium and iron.

Ural Mountains

A mountain range that runs approximately from north to south through western Russia, serving as a natural dividing line between Europe and Asia.

Plate Boundary

The border between two tectonic plates, which can be sites of earthquakes, volcanoes, and mountain building.

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Faults that were formed millions of years ago and may no longer be active, but their presence influences the structure and the geological history of the Earth's crust.