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22) 3elow is a payoff table that lists four mortgage options. The numbers in the table represent borrowing costs. All the decision analysis questions that
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3elow is a payoff table that lists four mortgage options. The numbers in the table represent borrowing costs. All the decision analysis questions that deal with mortgage options are based on this narration, i.e., you may reuse the model and the resulting solution to answer related questions. Outcome Decision Alternative Rates Rise Rates Stable Rates Fall 1-year ARM $66,645 $43,650 $36,560 m m 30-year fixed $52,276 $52,276 S5L276 The probability of rates rising is 0.52, rates stable is 0.33, and rates falling is 0.15. f the decision-maker uses the Expected value criterion, which decision alternative would slhe choose? A,1-year ARM Bi 3-year ARM C. 5-year ARM D. 30-year ARMStep by Step Solution
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