Use the information below to answer the following question$($s$).$

Below is a payoff table that lists four mortgage options:

Outcome

Probability

$0\mathrm{.}6$

$0\mathrm{.}3$

$0\mathrm{.}1$

Decision

Rates Rise

Rates Stable

Rates Fall

$1-$year ARM

$$68,246$

$$47,487$

$$36,450$

$3-$year ARM

$$64,897$

$$49,356$

$$44,898$

$5-$year ARM

$$57,240$

$$52,988$

$$50,642$

$30-$year fixed

$$59,720$

$$59,720$

$$59,720$

The probability of rates rising is $0\mathrm{.}6,$ rates stable is $0\mathrm{.}3,$ and rates falling is $0\mathrm{.}1.$ Answer the following questions by creating a decision tree.

Which of the following is considered the best expected value decision?

Use the information below to answer the following question$($s$).$

Below is a payoff table that lists four mortgage options:

Outcome

Probability

$0\mathrm{.}6$

$0\mathrm{.}3$

$0\mathrm{.}1$

Decision

Rates Rise

Rates Stable

Rates Fall

$1-$year ARM

$$68,246$

$$47,487$

$$36,450$

$3-$year ARM

$$64,897$

$$49,356$

$$44,898$

$5-$year ARM

$$57,240$

$$52,988$

$$50,642$

$30-$year fixed

$$59,720$

$$59,720$

$$59,720$

The probability of rates rising is $0\mathrm{.}6,$ rates stable is $0\mathrm{.}3,$ and rates falling is $0\mathrm{.}1.$ Answer the following questions by creating a decision tree.

Which of the following is considered the best expected value decision?