CAS-004 Governance, Risk, and Compliance Practice Question
A security analyst is calculating the annualized loss expectancy (ALE) for a server. The single loss expectancy (SLE) is $5,000 and the annualized rate of occurrence (ARO) is 0.2. What is the ALE?
⚠ Common exam trap
CAS-005 often tests whether candidates confuse the ALE formula (SLE × ARO) with related formulas like SLE (AV × EF) or with additive/multiplicative errors, catching those who add SLE and ARO or invert the division.
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
✓
$1,000
The Annualized Loss Expectancy (ALE) is calculated as SLE × ARO. With an SLE of $5,000 and an ARO of 0.2, the ALE is $5,000 × 0.2 = $1,000. This represents the expected yearly financial loss from the risk event, factoring in how often it is expected to occur.
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
ALE is SLE multiplied by ARO, so $5,000 × 0.2 = $1,000, not $0. Zero would only apply if the asset had no value or the threat never occurred, which contradicts the given ARO of 0.2. This figure likely comes from misreading the decimal as zero occurrences.
- ✗
$5,200
Why it's wrong here
$5,200 adds SLE to ARO rather than multiplying them; ALE requires SLE × ARO, giving $1,000. Summing is tempting when treating ARO as a dollar figure, but ARO is a frequency, so addition has no meaning here.
- ✓
$1,000
Why this is correct
Multiplying SLE by ARO gives $5,000 × 0.2 = $1,000, the annualised loss expectancy. This satisfies the stem's requirement to quantify expected yearly loss from the server risk, expressing exposure as a single monetary figure rather than a frequency or per-incident cost.
- ✗
$25,000
Why it's wrong here
ALE is SLE × ARO, giving $1,000, not $25,000. That figure results from dividing SLE by ARO ($5,000 ÷ 0.2), inverting the formula. Division would apply when deriving SLE from a known ALE and ARO, not when calculating ALE itself.
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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.