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CAS-004 Governance, Risk, and Compliance Practice Question

A security analyst is calculating the annualized loss expectancy (ALE) for a server that has an asset value of $50,000 and an exposure factor (EF) of 0.2. The annualized rate of occurrence (ARO) is estimated at 4. What is the ALE?

⚠ Common exam trap

CAS-005 often tests the confusion between SLE and ALE; candidates stop at AV × EF and forget to multiply by ARO, or they skip the EF and multiply AV × ARO instead.

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

✓

$40,000

The ALE is calculated as SLE × ARO, where SLE (Single Loss Expectancy) = Asset Value × Exposure Factor. Here, SLE = $50,000 × 0.2 = $10,000, and ARO = 4, so ALE = $10,000 × 4 = $40,000. This represents the expected annual monetary loss 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.

  • ✗

    $10,000

    Why it's wrong here

    $10,000 is the single loss expectancy (AV × EF), not the ALE. The ARO of 4 must then multiply it, giving $40,000. Stopping at SLE is tempting because it is the intermediate step, but the question asks for the annualised figure.

  • ✓

    $40,000

    Why this is correct

    Multiplying asset value by exposure factor gives the single-loss expectancy: $50,000 × 0.2 = $10,000. Annualising by the ARO of 4 yields $40,000, satisfying the stem's requirement to compute ALE from AV, EF and ARO. The $40,000 figure therefore matches the correct calculation.

  • ✗

    $50,000

    Why it's wrong here

    $50,000 is the asset value (AV) alone, not the ALE. The calculation requires SLE = AV × EF = $10,000, then ALE = SLE × ARO = $40,000. Quoting AV is tempting because it is the largest given figure, but AV never appears directly in the ALE formula.

  • ✗

    $200,000

    Why it's wrong here

    ALE is single loss expectancy multiplied by annualised rate of occurrence: $50,000 x 0.2 = $10,000 SLE, then $10,000 x 4 = $40,000. The $200,000 figure multiplies asset value by ARO, omitting the exposure factor, which overstates expected annual loss fourfold.

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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.