Use the Failure Probability and Consequence Scores Shown in the Table

question 81

Multiple Choice

Use the failure probability and consequence scores shown in the table to determine the consequence of failure for the project. $$\begin{array} { | l | l | l | l | } \hline \text { Maturity } & 0.6 & \text { Cost } & 0.2 \\\hline \text { Complexity } & 0.8 & \text { Bchedule } & 0.3 \\\hline \text { Dependency } & 0.6 & \text { Reliability } & 0.2 \\\hline & & \text { Performance } & 0.5 \\\hline\end{array}$$

• A)Greater than 0.7
• B)Less than or equal to 0.7 but greater than 0.5
• C)Less than or equal to 0.5 but greater than 0.3
• D)Less than 0.2

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Definitions:

Put Option

A put option is a financial contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Call Option

An agreement in finance which allows the purchaser to have the option, but not the commitment, to purchase a certain amount of a specific asset at a pre-agreed price during a fixed period.

Specified Price

A predetermined price set in a contract or agreement, often related to sales or financial instruments.

Perfect-Hedging

A risk management strategy that completely eliminates the risk associated with an investment by taking an equal but opposite position in the derivatives market.