Step 1: Isolate y.
Rearranging the given equation \( e^x = y + \sqrt{1 + y^2} \), we can solve for \( y \). The solution simplifies to \( y = \frac{1}{2} (e^x - e^{-x}) \).
Step 2: Conclusion.
The correct answer is (A), \( \frac{1}{2} (e^x - e^{-x}) \).