Members of a Project Team Have Used FMEA to Calculate

question 4

Multiple Choice

Members of a project team have used FMEA to calculate the RPN for one of the risks it has identified. The RPN is 200. Which of the following combinations could have produced this score?

• A) Severity: 50, Likelihood: 100, Detection Difficulty: 50
• B) Severity: 100, Likelihood: 2, Detection Difficulty: 1
• C) Severity: 50, Likelihood: 2, Detection Difficulty: 10
• D) Severity: 199, Likelihood: 1, Detection Difficulty: 0
• E) Severity: 5, Likelihood: 5, Detection Difficulty: 8
• F) B and E both are possible
• G) A and D are both possible

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Definitions:

Target Capital Structure

The optimal mix of debt, preferred stock, and common equity that a company aims to achieve for financing its operations and growth.

Weighted Average Cost

This is often used in the context of 'Weighted Average Cost of Capital (WACC)', which measures a company's cost of capital from all sources weighted by their relative use in the financial structure.

EPS

Earnings Per Share is a company's profit divided by the outstanding shares of its common stock, serving as an indicator of a company's profitability.

Business Risk

Business risk relates to the potential that a company's operations or environment will lead to financial loss or failure.