When a decision maker is faced with a decision and the probabilities of various outcomes are known, the situation is said to be decision making
Answer(s): A
Decision making under risk entails consideration of multiple possible future states of nature for each choice. The decision is under risk if a probability distribution for these states can be estimated. Thus, the states of nature will be mutually exclusive, and the sum of their probabilities will equal 1.0. Risk increases as the variability of outcomes become greater. In practice, however, the terms risk and uncertainly are often treated as synonyms.
Evaluating performance and giving feedback is the final step in the decision-making process. This step involvesI). Proper delegation of authority.II). Placement of the solution in a feasible framework.Ill). Effective communication of the decision.
Answer(s): D
The step of evaluating performance and giving feedback is vital to improve future execution of the prior steps or even the decision model itself. The proper delegation of authority is made to the individual responsible for implementing the action to be taken. Performance measurement is then provided for. This process puts the solution into a feasible framework, which assures it will be carried out. Finally, decisions cannot be fully implemented until they are effectively communicated.
Stroll, Inc. is in the process of making an investment decision. It has identified the following alternative investment opportunities: real estate, stocks, bonds, or mutual funds. After determination of the investment alternatives, Stroll will go through all of the following logical steps of the decision analysis model, except:
The parameters of what to do with high unused cash balances are set forth as a result of the investment choice that is eventually made. It is not an appropriate factor in the decision whether to undertake an investment to begin with.
Okra, Inc. has been experiencing sales difficulties over the last two years. Management has identified the problem: poor customer service and lack of internal coordination among the marketing department, the production department, and the finance department. In making a decision to solve the problem, management took the following logical steps (not necessarily in this order):1. Concluded that extensive training would improve performance and efficiency of all the involved departments; replacing the head of the marketing department will increaseprofitability only; and investing in information technology will improve customer satisfaction but will not solve communication problems.2. Identified three possible ways to solve the problem: extensive personnel training in the involved departments; replacing the head of the marketing department or investing in IT.3. Agreed upon key performance indicators, such as customer satisfaction, customer retention, and product and customer profitability to assess the effectiveness of the proposed solution.4. Decided to conduct extensive training for marketing department personnel and limited communication training for production and finance departments. What is the correct sequence of these logical decision-making steps?
The correct sequence of steps in a rational decision making process are as follows, keyed to the steps in Okra's process: defining the problem, obtaining information, identifying alternative courses of action, making predictions about the future costs, choosing and justifying an alternative, implementing the decision, and evaluating performance to provide feedback.
Malony, Inc.'s $1,000 par value preferred stock paid its $100 per share annual divided on April 4 of the current year. The preferred stock's current market price is $960 a share on the date of the dividend distribution. Maloney's marginal tax rate (combined federal and state) is 40%, and the firm plans to maintain its current capital structure relationship. The component cost of preferred stock to Maloney would be closest to
Dividends on preferred stock are not deductible for tax purposes; therefore, there is no adjustment for tax savings. The annual dividend on preferred stock is $100 when the price of the stock is $960.This results in a cost of about 10.4% ($100 + $960).
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