Velvet is working for a chemical industry, and her management proposed two different projects to manufacture benzene for commercial use. After doing financial analysis, the financial advisor provided her with the following statistics about the projects: Project 1: 60 percent probability of success with a profit of $500,000 and 20 percent probability of failure with a loss of $200,000. Project 2: 30 percent probability of success with a profit of $300,000 and 30 percent probability of failure with a loss of $400,000. Based on the information above, Velvet should choose:
Select one
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B.
C.
D.
Answer and explanation:
Profit or loss from a project = (Expected Profit * Probability of Profit) - (Expected Loss * Probability of Loss). For project 1, the profit or loss = (500000*0.6 - 200000*0.2) = 300000 - 40000 = $260,000 profit. For project 2, the profit or loss = (300000*0.3 - 400000*0.3) = 90000 120000 = ($30,000) = $30,000 loss. Hence, velvet should select project 1, which can yield a profit.
Question 2 - ID: 841701
A number of identified risks occurred early in a project. As a result, most of the project objectives ended up in jeopardy. The project manager decided to present a case to management that the project be closed down. This is an example of:
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B.
C.
D.
Answer and explanation:
Risk avoidance involves changing the project management plan to eliminate the risk. Although an extreme situation, shutting down a project constitutes a radical but legitimate avoidance strategy.
Question 3 - ID: 311794
At the beginning of the project, a project manager realized the technical expertise of the team was limited, a risk to the project. Midway through the project, the project manager decided that this was no longer a risk and considered it outdated. As part of which process would he do the risk reassessment?
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D.
Answer and explanation:
Risk reassessment is performed as part of the monitor risks process. Such project risk reassessments should be regularly scheduled and may result in the closure of outdated risks.
Question 4 - ID: 751430
You have assembled a group of subject matter experts (SMEs) to define risk probability and impact levels. You and your team are still in what process group?
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D.
Answer and explanation:
The probability and impact definitions are developed during the plan risk management process which is a part of the planning process group.
Question 5 - ID: 521892
While analyzing the risks in a project, a project manager updated the risk register with risk urgency assessment ratings. In which process would this be done?
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B.
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D.
Answer and explanation:
Risk urgency information is updated to the risk register during the perform qualitative risks analysis process.
Question 6 - ID: 761303
Early in the project, you are meeting with your team and would like to address all the strengths, weaknesses, opportunities, and threats the project is facing. What tool should be used?
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C.
D.
Answer and explanation:
A swot analysis chart would be the best choice. Swot is an acronym for strengths, weakness, opportunities and threats.
Question 7 - ID: 701792
If a project has a 60 percent chance of a $100,000 profit and a 40 percent chance of a $100,000 loss, the expected monetary value of the project is:
Perform Qualitative Risk Analysis is a quick way to prioritize how a project team will respond to risks. It is based on risk _________________ and _________________.
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C.
D.
Answer and explanation:
Perform qualitative risk analysis is usually a rapid and costeffective means of establishing priorities for the plan risk responses process.
Question 9 - ID: 461513
Risks may be identified during the entire lifecycle of a project. Identify Risks is what type of process?
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D.
Answer and explanation:
Identify risks is an iterative process, because new risks may become known as the project progresses through its lifecycle.
Question 10 - ID: 331808
The Identify Risks process involves determining which risks may impact a project. It is considered an iterative process. What is the frequency of the iteration?
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C.
D.
Answer and explanation:
Identify risks is an iterative process as risks become known or evolve. The frequency of iteration, and who participates in each cycle, will vary by the situation.
Question 11 - ID: 871774
Identification of new risks, reassessment of old risks, and closing of outdated risks are part of the Monitor Risks process. How often should project risk reassessment be scheduled?
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B.
C.
D.
Answer and explanation:
The monitor risks process is performed throughout the project. The number of project risk reassessments scheduled depends on the progress of the project relative to its objectives.
Question 12 - ID: 451048
Project risks should be identified by:
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B.
C.
D.
Answer and explanation:
While it is not feasible to invite everyone to the risk identification meetings, everyone should be encouraged to identify risks as they encounter them.
Question 13 - ID: 451037
During the Plan Risk Management process, assigning ___________ will help you and the project team identify all important risks and work more effectively during the identification process.
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C.
D.
Answer and explanation:
Risk categories provide a structure that ensures a comprehensive process of systematically identifying risks and that contributes to the effectiveness and quality of the process.
Question 14 - ID: 881741
You are the project manager of a project and are about to conduct a risk identification exercise in a few days’ time. You want to remind the participants in the exercise beforehand of the various sources from which risk may arise in the project. What could you use to help you do this?
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D.
Answer and explanation:
The risk breakdown structure (rbs) is a hierarchically organized depiction of identified project risks arranged by risk category and subcategory. This may be based on a previously prepared categorization framework. The rbs serves to remind participants in the risk identification exercise of the different sources from which project risk may arise.
Question 15 - ID: 961279
You are analyzing the risk in a project. You decide to do a sensitivity analysis to determine which risks have the most potential impact on the project. You consider using a tool to help compare the relative importance of variables that have a high degree of uncertainty with those variables that are more stable. One such tool is:
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B.
C.
D.
Answer and explanation:
A tornado diagram is useful for comparing the relative importance of variables that have a high degree of uncertainty with those that are more stable.
Question 16 - ID: 911359
There are a number of risks that have been identified in your project. The team has decided not to change the project plan to deal with the risks, but they have established a contingency reserve of money in the event something triggers these risks. This is an example of what type of risk mitigation technique?
Select one
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B.
C.
D.
Answer and explanation:
Recognizing the risk and not changing the plan but making some contingencies in the event the risk is triggered is an example of active acceptance. Passive acceptance would recognize the risk but not put contingencies in place, and avoidance would be correct if the project plan were modified.
Question 17 - ID: 691541
Which of the following is not an appropriate method for dealing with a negative risk?
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B.
C.
D.
Answer and explanation:
Exploitative strategies are selected for risks with positive impacts where the organization wishes to ensure the opportunity is realized. This strategy seeks to eliminate the uncertainty associated with a particular upside risk by making the opportunity happen.
Question 18 - ID: 521860
Decision tree analysis is used to calculate the average outcome when the future includes scenarios that may or may not happen. What are a decision node’s inputs and outputs?
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B.
C.
D.
Answer and explanation:
Decision tree analysis is used to calculate the average outcome when the future includes scenarios that may or may not happen. In a decision node, the input is the cost of each decision and the output is a decision made.
Question 19 - ID: 331067
In general, Perform Qualitative Risk Analysis is:
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B.
C.
D.
Answer and explanation:
Perform qualitative risk analysis is quicker than perform quantitative risk analysis as it focuses on high-priority risks.
Question 20 - ID: 951788
Your project sponsor has asked you to present your project’s high-level risk register to him in the next project update meeting. To create your high-level risk register, which of the following processes must be performed?
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B.
C.
D.
Answer and explanation:
A high-level risk register contains the identified risks only. The risk register is created during the identify risks process.
Question 21 - ID: 641535
The project manager in charge of a new credit card software project has asked the product manager to create a checklist to assist with identifying risks. A project manager can create a risk checklist from which of the following sources?
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B.
C.
D.
Answer and explanation:
The lowest level of the rbs can be used as a risk checklist.
Question 22 - ID: 531780
A project manager has decided to use a decision tree to do a build or upgrade analysis. The build requires an investment of $200M. On the build decision branch, there is a 60 percent probability of strong demand (yielding a revenue of $400M) and a 40 percent probability of weak demand (yielding a revenue of $150M). What is the expected monetary value (EMV) of the build?
Select one
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B.
C.
D.
Answer and explanation:
The payoff for the strong demand scenario is $400m - $200m = $200m (since the initial investment is $200m). The payoff for the weak demand scenario is $150m - $200m = - $50m. Therefore, the emv is computed as: (0.6 * 200) + (0.4 * -50), where 0.6 represents the 60% probability of the strong demand scenario and 0.4 represents the 40% probability of the weak demand scenario. 120 - 20 = 100. Therefore, the expected monetary value is $100m.
Question 23 - ID: 231278
Robert wants to assign a risk owner for every project risk for which a risk response action is planned. Where must he update this information?
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B.
C.
D.
Answer and explanation:
The assigned risk owners are documented in the risk register.
Question 24 - ID: 981796
As part of a strategy to handle negative risk, a project manager decided to adopt less complex processes, conduct more tests, and choose a more stable supplier. What strategy would this be classified as?
Select one
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B.
C.
D.
Answer and explanation:
Actions such as adopting less complex processes, more testing, or choosing a more stable supplier would be considered mitigation. These actions reduce the probability and impact of risks.
Question 25 - ID: 631947
You have been managing a research project to create genetically modified fruits using genetic engineering techniques. Since many legal issues are involved in this process, you created contingency allowances by using various quantitative analysis methods to account for cost uncertainty. You have just concluded a brainstorming session with your team in the execution phase to monitor risks that have developed in the project over the past few weeks and to establish new risk response plans. What should you do if you want to allocate more contingency reserves to account for new risks?
Select one
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B.
C.
D.
Answer and explanation:
Many risks may develop over the course of any project. Project managers must monitor those risks and plan risk responses. The reserve analysis is used as a tool in the monitor risks process. This technique is used to compare the amount of contingency reserves remaining to the amount of risk remaining throughout the execution of the project. Hence, you must conduct a reserve analysis first to decide on the contingency allowances.
Question 26 - ID: 981483
Which type of risk analysis ranks risks for future action or analysis by evaluating their probability of occurrence and impact?
Select one
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B.
C.
D.
Answer and explanation:
Qualitative analysis examines risks from the risk register and analyzes each risk’s probability of occurrence and the effect it would have on the project deliverables if it did occur. It ranks risks for future action or analysis by evaluating their probability of occurrence and impact.
Question 27 - ID: 891548
A project manager is using a Risk Diagramming technique that is a graphical representation of situations showing causal influences, time ordering of events, and other relationships among variables and outcomes. This would be:
Select one
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B.
C.
D.
Answer and explanation:
A risk diagramming technique that is a graphical representation of situations showing causal influences, time-ordering of events and other relationships among variables and outcomes is known as an influence diagram. The cause-and-effect diagram also identifies the causes of risk but does not have the time-ordering of events.
Question 28 - ID: 491787
Anne is the project manager of a project. She has evaluated certain responses from prospective sellers and wants to select a contract model that will transfer risk to the seller. Which of the following should she select in order to achieve this?
Select one
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B.
C.
D.
Answer and explanation:
A fixed-price contract enables the buyer to transfer risk to the seller.
Question 29 - ID: 581105
Which of the following items needs to be kept in mind when relying on risk identification checklists?
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B.
C.
D.
Answer and explanation:
While the risk identification checklist is a useful tool, it should be used in combination with the other tools, since it is impossible to cover all scenarios in one checklist.
Question 30 - ID: 421275
The Risk Register contains details of all identified risks and their current status. It is a document containing the results of:
Select one
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B.
C.
D.
Answer and explanation:
The risk register contains the results of the perform qualitative risk analysis, perform quantitative risk analysis, and plan risk responses processes. It details all identified risks, including description, category, cause, probability of occurring, impact(s) on objectives, proposed responses, owners, and current status.
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