CAPM (Certified Associate in Project Management) Practice Exam

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Prepare for the CAPM (Certified Associate in Project Management) exam with our informative quiz. Test your knowledge through multiple-choice questions and detailed explanations to boost your confidence and readiness for the certification.

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How is expected monetary value analysis calculated?

Sum of all possible outcomes
Multiplying outcome value by its probability and adding the products together
Calculating the difference between costs and benefits
Using a fixed value for each outcome

The correct answer is: Multiplying outcome value by its probability and adding the products together

Expected monetary value analysis is a decision-making tool that helps to determine the potential financial outcome of a decision by considering the probability of each potential outcome. A is incorrect because it only considers the sum of outcomes without taking into account the probability of each outcome. C is incorrect because it only focuses on the difference between costs and benefits without considering the probability of each outcome. D is incorrect because it uses a fixed value for each outcome rather than considering the probability of each outcome. Therefore, B is the correct answer as it properly incorporates both the outcome value and probability to determine the expected monetary value.