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PFMP · Question #469

Your CEO is keen to know the likelihood of the portfolio to realize the expected ROI. You are currently looking for a tool to calculate the probability to achieve portfolio objectives. Which of the…

The correct answer is C. Risk Exposure Charts. This question tests knowledge of which tool is used to calculate the probability of achieving portfolio objectives such as expected ROI.

Portfolio Risk Management

Question

Your CEO is keen to know the likelihood of the portfolio to realize the expected ROI. You are currently looking for a tool to calculate the probability to achieve portfolio objectives. Which of the following will help you in doing that?

Options

  • ASWOT Analysis
  • BDelphi
  • CRisk Exposure Charts
  • DInvestment Choice Analysis

How the community answered

(32 responses)
  • A
    3% (1)
  • B
    3% (1)
  • C
    88% (28)
  • D
    6% (2)

Why each option

This question tests knowledge of which tool is used to calculate the probability of achieving portfolio objectives such as expected ROI.

ASWOT Analysis

SWOT Analysis identifies strategic strengths, weaknesses, opportunities, and threats but does not produce a quantitative probability calculation for achieving specific financial targets.

BDelphi

The Delphi technique is a structured qualitative expert consensus method used for forecasting and estimation, not for calculating the probability of achieving portfolio financial objectives.

CRisk Exposure ChartsCorrect

Risk Exposure Charts display a probability distribution of possible portfolio outcomes by aggregating the likelihood and impact of all identified risks, allowing the portfolio manager to determine the probability of achieving specific targets such as the expected ROI. They give the CEO a quantitative, visual representation of how confident the organization can be in meeting its financial objectives.

DInvestment Choice Analysis

Investment Choice Analysis compares and evaluates investment alternatives but does not calculate the probability of achieving a specific portfolio outcome such as ROI.

Concept tested: Risk Exposure Charts for portfolio objective probability analysis

Source: https://www.pmi.org/pmbok-guide-standards/foundational/standard-for-portfolio-management

Topics

#Portfolio Risk Management#Risk Analysis#Portfolio Performance#Portfolio Tools

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