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CAS-004 Governance, Risk, and Compliance Practice Question

A security analyst calculates the annualized loss expectancy (ALE) for a server. The single loss expectancy (SLE) is $50,000, and the annualized rate of occurrence (ARO) is 0.2. What is the ALE?

⚠ Common exam trap

CAS-005 often tests the confusion between the ALE formula and other combinations like SLE + ARO or SLE / ARO, leading candidates to pick a mathematically incorrect option.

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

The annualized loss expectancy (ALE) is calculated by multiplying the single loss expectancy (SLE) by the annualized rate of occurrence (ARO). Here, SLE = $50,000 and ARO = 0.2, so ALE = $50,000 * 0.2 = $10,000. This represents the expected monetary loss per year from the risk.

Answer analysis

Option-by-option breakdown

For each option: why learners choose it and why it is or isn't the right answer here.

  • ✗

    $50,200

    Why it's wrong here

    Adding SLE and ARO treats the formula as SLE + ARO, which is arithmetically wrong; ALE is SLE multiplied by ARO, giving $10,000. Summing the two figures is tempting because both inputs appear in the calculation, but they are multiplied, not added.

  • ✗

    $2,500

    Why it's wrong here

    Dividing SLE by ARO inverts the ALE formula; $50,000 ÷ 0.2 gives $250,000, not $2,500. The division approach is tempting when ARO is below 1, because it appears to scale the loss down, yet ALE requires SLE × ARO.

  • ✓

    $10,000

    Why this is correct

    ALE is calculated by multiplying single loss expectancy by annualised rate of occurrence: $50,000 × 0.2 = $10,000. This quantifies the expected annual loss from the risk, matching the stem's supplied SLE and ARO values.

  • ✗

    $250,000

    Why it's wrong here

    Multiplying SLE by the reciprocal of ARO (1 ÷ 0.2 = 5) produces $250,000, which inflates rather than reduces the expected loss. Inverting ARO is tempting because a fractional rate feels like it should divide, but ALE is SLE × ARO = $10,000.

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JA

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.