CAS-004 Governance, Risk, and Compliance Practice Question
A security analyst calculates the annual loss expectancy (ALE) for a critical asset. The single loss expectancy (SLE) is $50,000, and the annualized rate of occurrence (ARO) is 0.2. What is the annual loss expectancy?
⚠ Common exam trap
CAS-005 often tests whether candidates remember ALE = SLE × ARO rather than adding, dividing, or inverting the operands — the distractors are deliberately built from those arithmetic mistakes.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
$10,000
Annualized Loss Expectancy is calculated as ALE = SLE × ARO. With SLE = $50,000 and ARO = 0.2 (meaning the loss event is expected 0.2 times per year, i.e., once every five years), ALE = 50,000 × 0.2 = $10,000. This represents the expected yearly financial loss from the risk and is used to justify whether a control costing less than $10,000 per year is worth implementing.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$0
Why it's wrong here
A zero result would require either SLE or ARO to be zero, but both are non-zero here. Multiplying $50,000 by 0.2 gives $10,000, not $0. Zero would be the correct ALE only for an asset with no expected annual loss exposure.
- ✓
$10,000
Why this is correct
Multiplying the single loss expectancy of $50,000 by the annualised rate of occurrence of 0.2 yields $10,000, satisfying the stem's quantitative risk calculation. This figure represents the expected yearly financial loss from the asset, enabling cost-benefit comparison against proposed security controls.
- ✗
$50,200
Why it's wrong here
Adding SLE and ARO treats the formula as ALE = SLE + ARO, but ALE is the product SLE × ARO. The $50,200 figure merely appends the 0.2 rate to the loss expectancy. Addition would apply when combining independent loss components, not when annualising a single loss.
- ✗
$250,000
Why it's wrong here
Dividing SLE by ARO inverts the ALE formula, which multiplies SLE by ARO. $250,000 equals $50,000 ÷ 0.2, yielding the loss frequency implied by a given ALE rather than the ALE itself. Division would be the correct operation when solving for ARO from known ALE and SLE.
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Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official CompTIA exam blueprint
This CAS-005 practice question is part of Courseiva's free CompTIA certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the CAS-005 exam.