The correct answer is Type 1 hypervisor, also known as a bare-metal hypervisor because it runs directly on the host's hardware to control the hardware and to manage guest operating systems. This type of hypervisor is suitable for enterprise environments where performance and resource optimization are critical. Type 2 hypervisor, on the other hand, runs on a host operating system and is often used for development or testing environments where performance is not the primary concern. VM templates are used to quickly deploy new VM instances with predefined configurations and are not a hypervisor. Serverless computing is a cloud computing execution model in which the cloud provider runs the server and dynamically manages the allocation of machine resources, and thus is not related to hardware-level virtualization.