Use the Information Given Below to Answer the Following Question(s)

question 39

Multiple Choice

Use the information given below to answer the following question(s) . Below is a payoff table that lists three mortgage options: $$\begin{array} { | l | l | l | l | } \hline & { \text { Outcome } } \\\hline \text { Decision } & \text { Rates Rise } & \text { Rates Stable } & \text { Rates Fall } \\\hline \text { 2-year ARM } & \$ 66,645 & \$ 43,650 & \$ 38,560 \\\hline \text { 5-year ARM } & \$ 62,857 & \$ 47,698 & \$ 42,726 \\\hline \text { 25-year fixed } & \$ 52,276 & \$ 52,276 & \$ 52,276 \\\hline\end{array}$$
-What is the maximum opportunity loss incurred for the 25-year fixed decision?

• A) $ 8,626
• B) $ 13,716
• C) $ 14,369
• D) $ 10,581

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Definitions:

Indefinitely

For an unspecified or unlimited period of time.

Shrinking Population

A demographic trend where the number of individuals in a population decreases over time due to factors like low birth rates, high death rates, and emigration.

Prereproductive Individuals

Organisms that have not yet reached sexual maturity and thus are not capable of reproduction.

Survivorship Curve

A graph showing the number or proportion of individuals surviving to each age for a given species or group.