In Chapter one, we learned about setting hiring standards. For example, Nancy and Kenita are two candidates who have applied for a job at a local investment bank in Maryland. The base salary is $$100$K$.$ It is expected that the new hire will work for this bank for at least five years. It is hard to say no to Nancy, as her records show she has been a steady employee who would be expected to produce $$200$K a year. Kenita is more of a risk, based on her background, and could be a star producing $$500$K or a $$disaster$,$ losing the company $$10$K$.$ Her expected productivity will be the same as Nancy$$s$.$ Assuming the firm is risk$-$neutral,

Which of the following statement is correct?

Group of answer choices

Nancy should be chosen because she is less risky. She is expected to produce $$200$K$.$

Firms should always make the $$safer$$ choice, which is Nancy.

Kenita is expected to produce $$245$K$.$ Firms should hire $$riskier$$ workers.

The higher those profits, the lower the option value from Kenita, who is a risky hire.