CIMA Exam CIMAPRO19-P02-1 Topic 8 Question 74 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 74
Topic #: 8

A manager must decide which one of three projects should be implemented. For each project the possible outcomes and their associated probabilities can be estimated reliably. The manager has decided to make the decision based solely on which project has the highest expected value of profit.

Which of the following statements are correct?

Select ALL that apply.

AThe manager will select the project with the lowest standard deviation.

BThe range of possible outcomes for each project is not important to the manager.

CThe decision is characterized by uncertainty and the manager is risk seeking.

DThe manager will select the project with the highest of all of the possible outcomes.

EThe decision is characterized by risk and the manager is risk neutral.

Show Suggested Answer

Suggested Answer: A

by Thaddeus at Sep 03, 2023, 10:24 AM

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10 days ago

Hmm, the manager should focus on maximizing expected value, not minimizing risk. Option E seems the most appropriate.

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