This 200-201 practice question tests your understanding of security concepts. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A security analyst is asked to assess the risk of a new web application. The analyst calculates the likelihood of a SQL injection as 0.3 and the impact as $100,000. What is the annualized loss expectancy (ALE) if the asset value is $500,000 and the exposure factor is 0.2?
$100,000
Why wrong: This is SLE, not ALE.
$50,000
Why wrong: This is likely SLE without ARO.
$15,000
Why wrong: This might result from using EF without AV or wrong multiplication.
$30,000
ALE = SLE * ARO = ($500,000 * 0.2) * 0.3 = $30,000.
Answer choices
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
$30,000
The annualized loss expectancy (ALE) is calculated as ALE = SLE × ARO, where SLE = AV × EF. Here, AV = $500,000 and EF = 0.2, so SLE = $100,000. The likelihood of 0.3 represents the annualized rate of occurrence (ARO), so ALE = $100,000 × 0.3 = $30,000. Option D is correct because it correctly multiplies the single loss expectancy by the annualized rate of occurrence.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
For each option: why learners choose it and why it is or isn't the right answer here.
$100,000
Why it's wrong here
This is SLE, not ALE.
$50,000
Why it's wrong here
This is likely SLE without ARO.
$15,000
Why it's wrong here
This might result from using EF without AV or wrong multiplication.
$30,000
Why this is correct
ALE = SLE * ARO = ($500,000 * 0.2) * 0.3 = $30,000.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
Cisco often tests the distinction between SLE and ALE, tricking candidates into stopping at the SLE calculation ($100,000) or misapplying the exposure factor to the impact instead of the asset value.
Detailed technical explanation
The ALE formula is central to quantitative risk analysis as defined in NIST SP 800-30 and ISO 27005. The exposure factor (EF) represents the percentage of asset value lost per incident (here 20%), and the annualized rate of occurrence (ARO) is the expected frequency per year (here 0.3, meaning once every ~3.3 years). In practice, ALE helps prioritize remediation: if the cost to mitigate SQL injection is less than $30,000/year, it is cost-justified.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
A practitioner preparing for the 200-201 exam encounters this exact type of scenario on the job. The correct answer here is not the most general option — it is the best answer for the specific constraint described. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Real exam questions reward reading the full scenario before eliminating options, because the constraint defines which answer fits.
What to study next
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FAQ
Security Concepts — This question tests Security Concepts — Read the scenario before looking for a memorised answer..
The correct answer is: $30,000 — The annualized loss expectancy (ALE) is calculated as ALE = SLE × ARO, where SLE = AV × EF. Here, AV = $500,000 and EF = 0.2, so SLE = $100,000. The likelihood of 0.3 represents the annualized rate of occurrence (ARO), so ALE = $100,000 × 0.3 = $30,000. Option D is correct because it correctly multiplies the single loss expectancy by the annualized rate of occurrence.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 25, 2026
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