CPA · Question 09 · Area 1: Business Analysis
Scenario: A company identifies two risks.<br/>Risk A: Probability 20%, Impact $1,000,000.<br/>Risk B: Probability 5%, Impact $5,000,000.<br/><br/>Which statement accurately compares these risks using Expected Value (EV) analysis?
Answer options:
Risk A has a higher Expected Value ($200,000) than Risk B ($25,000).
Risk B has a higher Expected Value ($250,000) than Risk A ($200,000).
Both risks have the same Expected Value.
Risk A is more critical solely because it has a higher probability.
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