Use the Information Below to Answer the Following Question(s) -Which of the Following Formulas Is Used to Determine the Are

question 12

Multiple Choice

Use the information below to answer the following question(s) . Below are four options for an investment decision. $$\begin{array} { | l | l | l | l | } \hline \text { Decision/Event } & \text { Rates Rise } & \text { Rates Stable } & \text { Rates Fall } \\\hline \text { Bank CD } & 0.80 & 0.80 & 0.80 \\\hline \text { Bond fund } & - 0.75 & 0.86 & 1.50 \\\hline \text { Index fund } & 0.00 & 0.90 & 1.20 \\\hline \text { Growth fund } & - 0.30 & 0.70 & 1.40 \\\hline\end{array}$$
-Which of the following formulas is used to determine the exponential utility function?

• A) U(x) = 1 + e-x/R
• B) U(x) = 1× ex/R
• C) U(x) = 1/ exR
• D) U(x) = 1 - e-x/R