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Corporate Decision Making Methods December 2011
Name: Surname:
ID.:
Write down your right answer by inserting an “X” in the chart:
Questions a b c d Question 1 Question 2 Question 3 Question 4 Question 5 Question 6 Question 7 Question 8 Question 9 Question 10 Question 11
GRADING: Right answer:
Wrong answer:
No answer: 0.
It is necessary for passing to get, at least, 5.0 points.
Exam will take 90 minutes.
This exam consists of 6 stapled sheets. Under no circumstances is detaching sheets allowed. Questions will be marked if they are written down in the chart.
Marks will be released on Internet.
Corporate Decision Making Methods December 2011
Corporate Decision Making Methods December 2011
Corporate Decision Making Methods December 2011
Questions 4 and 5.
George has been invited to a wedding in England next weekend, so he has to decide whether to go there or to spend that weekend at a Spa Hotel. If he decides to go to England, flight ticket will cost 120€, but probability of getting tickets is just 0.3. If he cannot get a flight ticket he is considering travelling by car till France and there he will take a passenger ferry, so it will cost him 400€. Going to Spa Hotel will cost him 240€.
- What decision will he make?
a) He will go to the wedding. b) He will go to a Spa Hotel c) He is indifferent between going to the wedding and to Spa. d) Certainly Equivalent to be indifferent is 300€
- If decision criterion is “To choose that alternative which gives the highest probability of spending more than 130€”, according to Stochastic Dominance Criterion the best option is:
a) To go to the weeding because F 1130 0. 7 b) To go to Spa Hotel because F 2130 0. 7 c) To go to Spa Hotel because F 2130 0. 3 d) To go to the weeding because F 1130 0. 3
Corporate Decision Making Methods December 2011
Questions 6 and 7.
John is a casino owner in Las Vegas, and he has to decide whether to make improvements to it or to replace slot machines. Costs to make improvements will depend on electrical system, which it can be in a good state, system needs some repairs or it must be replaced completely. If electric system is OK, costs will be 20.000 €, if it needs repaired 25.000 € and it needs replaced 30.000 €. Costs to replace slot machines are 23.000 €.
- If John is completely pessimistic when making a decision:
a) He will make improvements. b) He is indifferent between making improvements and replacing slot machines. c) Options a), b) and d) are wrong. d) He will replace slot machines.
- If he is going to make a decision according to opportunity costs: a) He prefers to replace slot machines. b) Options a), c) and d) are wrong. c) Both decisions are indifferent. d) He prefers to make improvements.
Corporate Decision Making Methods December 2011
Corporate Decision Making Methods December 2011
- Researcher can choose the following random decision rule:
1
2
Univ. Team Consulting Co. funded projects are high 0.7 0. Univ. Team Consulting Co. funded projects are low 0.4 0.
H A
X
X
a) Random decision rule is preferred to non-random decision rule. b) Random decision rule is as preferred as non-random rule. c) Random decision rule is less preferred than non-random decision rule. d) Both rules cannot be made a comparison.
