Shayla Is Thinking About Leaving Her Place of Work and Starting

Multiple Choice

Shayla is thinking about leaving her place of work and starting her own business. If she stays with her company, there is an 80 percent chance that she will remain in her current role earning $50,000 per year and a 20 percent chance that she will receive a promotion and earn $60,000 per year. If she starts her own business, there is a 40 percent chance she'll earn $80,000 per year; a 10 percent chance she'll earn $100,000 per year; and a 50 percent chance she'll earn $20,000 per year. Which of the following statements is true?

A) Shayla's expected earnings are $2,000 more if she stays with her current company.
B) If Shayla is risk neutral, she will be indifferent between staying with her current company and starting her own business.
C) Shayla's expected earnings are $55,000 per year if she stays with her current company.
D) None of these statements are true.