Use the Information Below to Answer the Following Question(s) -If the Payoff Is $2200 and R Is Equal to Are

question 42

Multiple Choice

Use the information below to answer the following question(s) . Below are four options for an investment decision. $$\begin{array} { | l | l | l | l | } \hline \text { Decision/Event } & \text { Rates Rise } & \text { Rates Stable } & \text { Rates Fall } \\\hline \text { Bank CD } & 0.80 & 0.80 & 0.80 \\\hline \text { Bond fund } & - 0.75 & 0.86 & 1.50 \\\hline \text { Index fund } & 0.00 & 0.90 & 1.20 \\\hline \text { Growth fund } & - 0.30 & 0.70 & 1.40 \\\hline\end{array}$$
-If the payoff is $2200 and R is equal to $500, what is the utility function?

• A) 0.9877
• B) 0.6819
• C) 0.7645
• D) 0.4502

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Definitions:

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