With the Failure Probability and Consequence Scores Shown in the Table

question 35

Multiple Choice

With the failure probability and consequence scores shown in the table, compute the overall risk factor for the project.

• A) less than or equal to 0.3
• B) greater than 0.3 but less than or equal to 0.4
• C) greater than 0.4 but less than or equal to 0.5
• D) greater than 0.5

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values; used in finance to quantify the risk associated with a security's return.

Market Risk

The risk of losses in investments attributable to market-wide phenomena, such as economic changes or interest rate fluctuations.

Beta

An indicator of how much a stock's price movement deviates from the general market, where a beta greater than 1 signifies more volatility than the overall market.

Required Return

The minimum rate of return on an investment that investors expect or require, taking into account the risk level of the investment.