CAPM Practice Question: Project Management Fundamentals and Core Concepts
Exhibit
Risk ID: R1, Probability: 0.3, Impact: $40,000 Risk ID: R2, Probability: 0.6, Impact: $50,000 Risk ID: R3, Probability: 0.2, Impact: $100,000
Refer to the exhibit. Which risk has the highest expected monetary value?
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
✓
R2
EMV for R1 = 0.3 * $40,000 = $12,000; R2 = 0.6 * $50,000 = $30,000; R3 = 0.2 * $100,000 = $20,000. R2 has the highest EMV.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
R1
Why it's wrong here
EMV is $12,000, lower than R2 and R3.
- ✗
R3
Why it's wrong here
EMV is $20,000, lower than R2.
- ✗
All have equal EMV
Why it's wrong here
EMVs are different.
- ✓
R2
Why this is correct
EMV is $30,000, the highest.
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