Write a 2 page essay on How to Invest $1,000.
Download file to see previous pages…
This change may be an increase or decrease. If it increases, it may exceed the amount of EMV.
However, if the probabilities are not 50/50, for instance 40/60 or 60/40, the EMV changes. Therefore to summarize the analysis, there are two variables which may affect Jim’s decision to move. These include the probabilities of the chance of getting a higher paying job and the chance of leading to a lower paying job and the current salary (Jones, 1999).
Jim’s decision theoretically depends on the amount of EMV compared to his current salary. Judging upon the changes in the variables which may take effect, both the options of staying in his current job and moving may be a good alternative.
If the expected value or EMV of the option of moving is greater than his current salary, then it would probably best for Jim to take the risk and move. In the contrary, if the EMV of moving is less than his current salary, then the option of staying in his current job would be better. Still, his decision must involve a comprehensive analysis of the probabilities of getting a higher or a lower paying job.