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

question 33

Multiple Choice

Use the information below to answer the following question(s) .
Below are four options for an investment decision.
$$\begin{array} { | l | l | l | l | } \hline \text { Decision/Event } & \text { Rates Rise } & \text { Rates Stable } & \text { Rates Fall } \\\hline \text { Bank CD } & 0.80 & 0.80 & 0.80 \\\hline \text { Bond fund } & - 0.75 & 0.86 & 1.50 \\\hline \text { Index fund } & 0 & 0.90 & 1.20 \\\hline \text { Growth fund } & - 0.30 & 0.70 & 1.40 \\\hline\end{array}$$
-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

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Definitions:

Foreign Exchange Rate

The price of one currency in terms of another.

Exchange Rate

The value of one currency for the purpose of conversion to another.

Gold Standard

A monetary system in which a country's currency or paper money has a value directly linked to gold, providing stability and confidence in the currency's value.

Self-Correcting Mechanism

In economics, a self-correcting mechanism refers to the natural adjustment of markets in response to imbalances, restoring them to equilibrium without outside intervention.