Suppose That the Introduction of a Preventive Maintenance Program Is

question 125

Multiple Choice

Suppose that the introduction of a preventive maintenance program is deemed cost effective. Which of the following is most likely true if the cost to actually perform preventive maintenance is very expensive?

• A) high standard deviation in MTBF
• B) low standard deviation in MTBF
• C) low Cost to Repair
• D) Repairs carry little non-monetary consequences.
• E) The system never fails.

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Definitions:

Investment

Allocating resources, usually money, with the expectation of generating an income or profit.

Reward-to-Variability Ratio

A ratio used to evaluate the return of an investment relative to its risk, with a higher ratio indicating a more favorable risk-reward profile.

Risk-free Rate

A presumed income from an investment that is free from any financial risk, typically reflected through government bond yields.

Efficient Frontier

A set of optimal portfolios that offer the highest expected return for a defined level of risk or the lowest risk for a given level of expected return, used in modern portfolio theory.