Assignment

Principle of Finance

1. Decisions may be made under states of certainty, risk, or uncertainty.

a) Recall three decision situations you had faced in your personal or educational life that
relate to three decision making conditions. Explain clearly why do you think each of
these situations is an example of decision situations of certainty, risk, or uncertainty?
(04)
b) Was each of your decision, good or bad decision? If given an option, what would you
have done differently to improve the earlier decisions? (01) Answer:
Decision under Certainty:
Complete and accurate knowledge of the outcome of each alternative. There is only one outcome
for each alternative.
For Example: After published my HSC exam result, I have to decide to admit me private
university and the next decision were to admit because there are Couple University BRAC &
UIU in my list of choices. I know exactly about admission tests, tuition fees, degree offered,
university standard, both universities have proven and guaranteed quality outcome and value.
The university thus knows the alternative condition associated with each other. There is little
ambiguity and relatively little chance of making a bad decision. Then I decided UIU for my
BBA program.
I think I made a good decision. I would have done differently, if I know the outcome and value
are different from each other’s then I might look at other alternate universities to get admission.
Decision under Risk
Complete and accurate knowledge of the outcome of each alternative. There is only one outcome
for each alternative. Instead of optimizing the outcomes, the general rule is to optimize the
expected outcome.
As an example: I was faced to decide with a choice between two actions one offering a 1%
probability of study abroad in the USA and the other a 50% probability of Europe, as a rational
decision-maker I choose the second alternative because it has the higher expected value higher
education in Europe as against from the first alternative.
My decision was perfect. I would have done differently to choose 1% probability but that would
be less chance to win but a better chance to get study abroad in the USA.
 Decision under Uncertainty
Decisions under uncertainty (outcomes are known but not the probabilities) must be handled
differently because, without probabilities, the optimization criteria cannot be applied.
As an example: I have been offering 3 subjects in last semester, but my parent asked me to take
another addition subject. As decision-makers, I don’t know the alternative, the risk associated
with each of the likely consequences of each alternative. There is a chance if I take another
difficult subject that might chance to get a lower GPA for each subject. In that case, as a decision
making, I have selected an easy additional subject (non-mathematical). Still, outcome may same
but no probability to get higher CGPA.
I believe I made the correct decision under uncertainty. I would have made decisions differently,
to find an easy subject that may help to improve get higher grades in other subjects. Because it
would take a Mathematical subject, that I have to concentrate more time-solving equations rather
than study other subjects.

2. You are currently enrolled at UIU, whether you made that decision or not, assume that
decision to join UIU was yours. Apply each of the six steps of rational perspectives on
decision making in explaining how decided on UIU. You may make necessary assumptions in
order to explain the steps. (05) Answer:
Below are rational perspectives on decision making how I decided on UIU:
Step 1: Identify and define the problem:
The first step to make a rational decision is to identify and describe the problem by defining the
current problem. During identifying the problem to identify the cause of the problem, not the
symptoms. Define the gap between the current state and the desired state. And the gap must be
enough to motivate the involved people to implement the decision. Define all available options
and don’t think about quick solutions.
For Instance, when my HSC result was published, and I have to get admission in the university.
Lots of university in my list but I have chosen UIU because UIU top-ranked private university in
domestic university ranking, Scholarship, Well -designed department and course etc.
Step 2: Identify the decision criteria:
The second step in the rational decision-making model is outlining all the criteria ahead of time
because those criteria will be a good guide to decide. We need to identify some criteria to
measure all alternatives and determining if there is a solution that is better than others. Example:
Is there any other university that give better ranked, better scholarship and better web design
course
Step 3: Evaluating alternatives:
Each alternative is evaluated to determine its feasibility, its satisfactoriness, and its
consequences. At this stage, we want to evaluate the alternatives that we’ve identified using the
criteria that we’ve identified in step2. This step may be lengthy depending on the number of
criteria and the number of alternatives.
Example: Scholarship policy can inspire me for good results and working hard. Increasing skills
can help me to get good and higher scholarships.
Step 4: Selecting the best alternative:
Consider all situational factors and choose the alternative that best fits the manager's situation.
Example: standard education and good result from UIU will help me to get higher education in
abroad.
Step 5: Implementing the chosen alternative:
Example: Based on the results of each semester get 100%, 50%, 25% scholarship from the
university. Several types of clubs are organized for increasing standards and skills.

Step 6: Following up and evaluation the result:

Example: After completed two semesters I noted that the English courses UIU provide, help me
a lot. It improved my English speaking, listening, and writing skills
.

3. Consider the list of jobs below. In your opinion, what is the appropriate span of
management for each? Describe the factors you considered in reaching your conclusion.
(06)
a. A physician practices medicine in a privately-owned clinic while also supervising a
number of professional nurses and office staff.
b. An owner–manager of a car workshop deals with customers, directs several
experienced mechanics, and also trains and oversees the work of some unskilled
laborers.
c. A manager in an international advertising agency directs a team of professionals who
are located in offices around the world.
Answer:
The appropriate span of management for the following list of Jobs:
Physician:
A medical practitioner can practice the span of management since he has fewer aides making
him have secure better supervision and control, due to the work being part of his career he can
create good relations with the staff members.
By considering various factors such as the:
Physical location, it contributes as a factor because of the chance of persons located at the same
place making them is to be controlled.
Another factor considers the capacity of subordinates which reflects on the Physician having a
real number that may just require him to offer broad guidelines to the workers for them to
perform accordingly.
Manager of an auto shop:
In this case, the owner-Manager span of management is not that vital as a factor like the capacity
of a manager is looked at in a way that the director's capacity and ability regarding
decisionmaking, leadership, communication, and judgment are required to prove the capability.
Manager in Advertising Agency:
As an international advertising agency administrator, a span of management is appropriate under
the following factors such as:
The capacity of subordinates in which the body may seem like it has several assistants who are
trained hence work is made much easier without the involvement of the manager at all times.
The other factor is the communication system which smothers the communication method by the
director due to the presence of tools like pads, Skype, and the websites that avoids face to face
interaction. This factor is preferable for the manager, especially for this international advertising
agency.

4. Assume following are the primary bases of departmentalization of UIU

1. Functional: Academic Lib CITS Fin & Acc DSA & CCC
2. Product: BBA ECO CSE EEE MBA MDS
3.
4. Customer: Undergraduate Graduate
Draw a single figure showing the best way UIU could arrange above departments. (04) (To
answer Q4 use of computer (any software) is optional, however, using pen/pencil to draw the
figure would be easier and recommended options. Once the drawing has been finalized
please copy-paste the figure into the word document where Q1-Q3 are being answered)