Company XYZ connects its sites over a private WAN. Their overlay network is running a DMVPN setup where the headquarters site is the hub. The company is planning on implementing multicast routing on…

PIM Dense Mode uses a flood-and-prune mechanism that initially sends multicast traffic to all routers, which is highly inefficient over a WAN and can cause bandwidth saturation on DMVPN tunnels.

Placing the RP at each remote spoke site creates a fragmented RP design that does not scale and introduces complex RP reachability requirements between spokes in a DMVPN environment.

PIM Dense Mode is unsuitable for WAN environments regardless of RP placement because its flooding behavior wastes limited WAN bandwidth on DMVPN tunnel interfaces.

PIM Sparse Mode is appropriate for WAN overlays like DMVPN because it uses an explicit join model, sending multicast traffic only to routers that have requested it, which preserves WAN bandwidth. Placing the RP at the hub is the correct choice because the hub is the central spoke aggregation point in a DMVPN topology, allowing spokes to register sources and join groups through a single, reachable RP without requiring spoke-to-spoke RP reachability.