Question 1

Which of the following is least likely a common modelling error?

O Calculating means instead of simulating scenarios

O Calculating variances instead of simulating scenarios

O Representing an uncertain variable more than once in a model

O Manipulating probability distributions as if they were fixed numbers

Question 2

If a risk analyst is interested in finding where a distribution is centered, he should look at a measure of
——.

O shape

O location

O consistency

Question 3

Which of the following is/are least likely an element's of an optimization problem?

O Constraints

O Input variables

O Objective function

Output Variable

Question 4

Assume that you are doing a risk analysis and have made 20 reasonable assumptions conceming your
analysis. Also assu ie I there is a 95% chance that an assumption made is correct. Which of the following
is the closest to the probability that all the

assumptions made are correct?

00.36

0037

00.63

00.73

Question 5

Which of the following is most likely true if a risk analysis is to sit within a certain framework?

O The risk analysis should comply with a common set of assumptions

O Some assumptions are to be revised frequently for the sake of comparison

O A common set of assumptions often makes comparison meaningless and unfair.

O Risk analysts must avoid making any assumptions while developing a risk model.

Question 6

Stochastic dominance tests are a statistical means of

O calculating the relative kurtosis of two distributions.

O calculating the relative skewness of two distributions.

O determining the variance of one distribution over another.

O determining the superiority of one distribution over another.

Question 7

If a random variable X is contimous, ic., it may take any value within a defined range (or sometimes
ranges), the probab ty f

X having any precise value within that range is:

O equal to 1 because ofits certainty.

O equal to 0.5 because of its central location.

Ovanishingly small because the total probability of 1 is allocated among an infinite number of values.

O significantly large because the total probability of 1 is allocated among an infinitely small number of
values.

Question 8

A is a stochastic process with sequential variables, where the expected value of each variable is the same
a4

independent of previous observations.

Martingale

ODixi

OGamma

Question 9

The third moment about the mean is called the:

skewness

Question 10

is a measure of the degree to which a distribution is “lopsided”

O Mode
O Variance

O Skewness

Question 11

A risk analysis model that separates uncertainty and variability is described as order.

O first

O third

O second

O fourth

Question 12

Which of the following best describes the difference between a risk and an opportunity?

OA tisk is a random event while an opportunity is a likely event.

O The size of impact is less for a risk as compared to an opportunity.

O The probability of occurrence is always more for a risk as compared to that of an opportunity.

OA risk is likely to impact an organization negatively while an opportunity would have positive impact
on an organization,

Question 13
Guruswamy, a risk manager at Global Finance Company, has allocated extra funds to a project to deal
with the associat«

risks. Which of the following risk management options has been exercised by Guruswamy in the
aforesaid scenario?

O Risk reserve

O Risk transfer

O Risk avoidance

O Risk acceptance

Question 14

Which of the following is most likely a cardinal rule of risk analysis modelling?

O Simulate when you can calculate.

O Simulate when you want exact answer.

O Every iteration of a risk analysis model must lead to an element of sensitivity analysis.

O Every iteration of a risk analysis model must be a scenario that could physically occur.

Question 15

Which of the following is least likely true regarding calculations relating to moments?

O The mean of the sum of two distributions is equal to the sum of their means.

O The mean of the product of two distributions is equal to the product of their means.
O The variance of the sum of two independent distributions is equal to the sum of their variances.

O The variance of the sum of two independent distributions is equal to the product of their variances.

Question 16

The NUSAP (Numeral Unit Spread Assessment Pedigree) method is a notational system that
communicates the:

Onoise in a dataset that is used in a risk analysis.

O outliers in a dataset that is used in a risk analysis.

Olevel of uncertainty for data in a scientific analysis used for policy making.

Olevel of inconsistency for data in a qualitative analysis used for policy making.

Question 17

Which of the following is most likely true about the Value-of- information (VOI) analysis?

O Value of perfect information (VOPI) is the outcome of the VOI analysis.

O VOI analysis helps to determine value of imperfect information (VOI) to facilitate decision making.

O The usual starting point of a VOI analysis is to consider the value of imperfect information (VOID.

OVO analysis helps to determine the worth of acquiring extra information to help the decision-maker.
Question 18

A model includes a time series forecast. Which of the following plots is most useful for graphical
representation of the res ts f

the model?

Otrend

O spider

Ohistogram

Question 19

Which of the following best describes the difference between the terms “variability” and “uncertainty”?

© Variability can be controlled while uncertainty cannot be controlled.

O Variability does not depend on the system while uncertainty depends on the system.

O Variability is associated with the effect of chance while uncertainty relates to assessor's level of
ignorance.

O Variability cannot be reduced by changing the physical system while uncertainty can be reduced by
altering the physical

ystem.
Question 20

Which of the following is most likely true if A and B are not mutually exclusive events?

OP(A UB) =P(A) + PB)

OPAU (A) - PB)

OP(A UB) = P(A) + PB) - PAN)

OP(A UB) = P(A) + PB) +P(ANB)

Question 21

In a least-squares linear regression, the fraction of the total variation in the dependent variable that is
explained by the

independent variable is known as the:

O total sum of square

O sum of squares errors.

O coefficient of correlation.

O coefficient of determination.

Question 22

In terms of utility, suppose a business unit considers a loss of Rs. 500,000 vastly larger than a gain of Rs.
500,000. Base o1

this information, which of the following is most likely the shape of the utity function of the business
unit?”

concave
Question 23

Which of the following risk management options is most appropriate for risks where the cost of control
is out of proporti iy t

the risk?

O Transfer

O Avoidance

O Acceptance

Question 24

The biggest uncertainty in a risk analysis is:

O associated with the estimation of size of impact of the risk event.

O associated with the estimation of probability of occurrence of a risk event.

O whether the analyst started off analyzing the right thing and in the right way.

Owhether models developed are free from model risks and capable of withstanding stress tests.

Question 25

Which of the following is most likely to reduce the file size while building a risk model?
O Avoiding use of softwares like ModelRisk

Avoiding use of fitted distibutions

Question 26

Which of the following theorems is a logical extension of conditional probability arguments?

O Bayes’ Theorem

O Binomial Theorem

O Central Limit Theorem

OTchebysheff's Theorem

Question 27

Aspit, a risk manager at Pioneer Manufacturers, has changed the country location of a factory to avoid
political instability it

country. Which of the following risk management options has been exercised by Arpit in the aforesaid
scenario?

Elimination

Question 28

Which of the following is most likely to make your simulation software run slower?

O Using Multiple CPUs if your simulation software offers this

O Tuming off the Update Display feature if your Monte Carlo add-in has that ability

O Running bootstrap analyses and Bayesian distribution calculations in a separate spreadsheet when you
are estimating

incorrelated parameters
O Using the VoseCumulAQ, VoseDiscreteQ), VoseDUniform(, VoseRelative() and VoseHistogram()
distributions with large

rays if possible

Question 29

Ifa risk analyst is interested in determining how broad a distribution is, he should analyze a measure of-

O shape

O location

O consistency

Question 30

Which of the following is most likely to make Excel run faster?

O Avoiding links to external files

O Avoiding built-in Excel functions

O Keeping the simulation model in different workbooks

O Using more and more array functions available in Excel

Test 2
Question 1

Which of the following is most likely a cardinal rule of risk analysis modelling?

Simulate when you can calculate.

Simulate when you want exact answer.

Every iteration of a risk analysis model must lead to an element of sensitivity analysis.

Every iteration of a risk analysis model must be a scenario that could physically occur.

Question 2

A ——— is a stochastic process with sequential variables, where the expected value of each variable is
the same a I independent of previous observations.

O Dirichle

O Gamma

O Martingale

O Pascal

Question 3

Which of the following is most likely to make your simulation software run slower?

O Using Multiple CPUs if your simulation software offers this

O Tuming off the Update Display feature if your Monte Carlo add-in has that ability

O Running bootstrap analyses and Bayesian distribution calculations in a separate spreadsheet when you
are estimating incorrelated parameters

O Using the VoseCumulA(, VoseDiscrete(), VoseDUniform(, VoseRelative() and VoseHistogram()

distributions with large rays if possible

Question 4

Which of the following is most likely true regarding an event tree?

O An event tree fails to be intuitive due to its complexity.

O An event depicts a probabilistic event without any reference to its impact.

O An event trees start from the right with a node and arrows to the left indicating possible outcomes.

O An event tree offers a way to describe a sequence of probabilistic events, together with their
probabilities and impacts.

Question 5

Ifa risk analyst is interested in determining how broad a distribution is, he should analyze a measure of-

O shape

O location

O consistency

Question 6

Which of the following is least likely true regarding calculations relating to moments?

O The mean of the sum of two distributions is equal to the sum of their means.

O The mean of the product of two distributions is equal to the product of their means.

O The variance of the sum of two independent distributions is equal to the sum of their variances.

O The variance of the sum of two independent distributions is equal to the product of their variances.

Question 7

The biggest uncertainty in a risk analysis is:

O associated with the estimation of size of impact of the risk event.

O associated with the estimation of probability of occurrence of a tisk event.

O whether the analyst started off analyzing the right thing and in the right way.

O whether models developed are free from model risks and capable of withstanding stress tests.

Question 8

If a risk analyst is interested in finding where a distribution is centered, he should look at a measure of
——.

O shape

O location

O consistency

Question 9

is a measure of the tailedness of a distribution.

O Mean

O Kartosis

O Quartile

O Percentile

Question 10

The fourth moment about the mean is called the:

O keurtosis

O variance

O percentile

Question 11
Which of the following is/are least likely an element's of an optimization problem?

Output variable

O Constraints

O Input variables

O Objective function

Question 12

Risk managers must distinguish between inherent risks and residual risks when developing a risk
management strategy. W ic’

the following best describes the difference between inherent risk and residual risk?

O Residual risk is concerned with compliance risks, while inherent risk deals with operational risks.

O Residual risk is concerned with hazard risks, while inherent risk deals with financial risks.

O Residual risk has got nothing to do with the mitigation efforts, while inherent risk decreases as the
mitigation efforts improve.

O Residual risk is the level of risk after the impact of mitigation efforts, while inherent risk is the risk
associated with the busines

»efore any impact of mitigation efforts.

Question 13

The third moment about the mean is called the:

skewness

Question 14

A model includes a time series forecast. Which of the following plots is most useful for graphical
representation of the res ts f

the model?
O trend

O spider

O histogram

Question 15

is a numerical measurement of the likelihood of an outcome of some stochastic process.

OProbability

O Variability

O Uncertainty

O Opportunity

Question 16

Which of the following theorems is a logical extension of conditional probability arguments?

O Bayes’ Theorem

O Binomial Theorem

O Central Limit Theorem

O Tchebysheff's Theorem

Question 17

The ———— process occurs when one is sampling randomly without replacement from some
population, and where on is

counting the number in that sample that have some particular characteristic.

Hypergeometric
Question 18

Which of the following is least likely to be associated with risk-analysis softwares?

OsQL

O Crystal Ball

OPERTmaster

Question 19

Which of the following is most likely true if A and B are not mutually exclusive events?

OP(A UB) =P(A) + PB)

OPAU (A) - PB)

OP(A UB) = P(A) + PB) - PAN)

OP(A UB) = P(A) + PB) +P(ANB)

Question 20

Aspit, a risk manager at Pioneer Manufacturers, has changed the country location of a factory to avoid
politcal instability it

country. Which of the following risk management options has been exercised by Arpit in the aforesaid
scenario?
Elimination

Question 21

Which of the following is least likely true regarding a decision tree?

OA decision tree is like an event tree but includes all possible decision options.

OA decision tree plays an important role in risk analysis for petroleum exploration projects.

OA decision tree sketches the possible decisions that one might make and the outcomes that might
result.

OA decision tree, unlike an event tree, considers only those decisions which lead to positive payoffs.

Question 22

A risk analysis model that separates uncertainty and variability is described as

order.

O first

O second

O fourth

Question 23

Which of the following probability models is most lxely to yield answers faster?
OA probability model that calculates the required probability

OA probability model that simulates the required probability

OA probability model that estimates the impact of a risk event

OA probability model that estimates the opportunities from a risk event

Question 24

A decision-maker has to work with the risk analyst precisely to define the questions that need
answering. Which of the fe ov 0

is least likely a consideration while defining the questions to be answered?

O The form of answer is to be discussed with the risk analyst.

O The target audience for the risk analysis needs to be determined.

O Questions that need answering are to be ranked from “critical” down to “interesting,”

O The risk analyst must stay away from prioritizing his projects inespective of their relative importance

Question 25

Assume that you are doing a risk analysis and have made 20 reasonable assumptions conceming your
analysis. Also assu ie i

there is a 95% chance that an assumption made is correct. Which of the following is the closest to the
probability that all the

assumptions made are correct?

00.36

0037

00.63

00.73

Question 26

Stochastic dominance tests are a statistical means of

O calculating the relative kurtosis of two distributions.

O calculating the relative skewness of two distributions.

O determining the variance of one distribution over another.

O determining the superiority of one distribution over another.

Question 27

Guruswamy, a risk manager at Global Finance Company, has allocated extra funds to a project to deal
with the associat«

risks. Which of the following risk management options has been exercised by Guruswamy in the
aforesaid scenario?
O Risk reserve

O Risk transfer

O Risk avoidance

O Risk acceptance

Question 28

Latin hypercube sampling uses a technique known as:

O stratified sampling with replacement

O stratified sampling without replacement.

O convenience sampling with replacement.

O convenience sampling without replacement.

Question 29

Which of the following is most likely to reduce the file size while building a risk model?

Avoiding use of fitted distibutions

O Avoiding use of softwares like ModelRisk

Question 30

Consider the following equations: F(x) = P(X <x) (1) GF(@)) = x (2) Which of the following is least likely
true about the above-mentioned equations?

O F() obviously ranges from 0 to 1.

O The inverse function G(F(x)) is used to generate random samples from each distribution.
O The cumulative distribution function F(x) denotes the probability P that the variable X will be greater
than or equal to x

O The cumulative distribution function F(x) gives the probability P that the variable X will be less than
or equal to x.

Question 1

Which of the following is most likely a cardinal rule of risk analysis modelling?

Simulate when you can calculate.

Simulate when you want exact answer.

Every iteration of a risk analysis model must lead to an element of sensitivity analysis.

Every iteration of a risk analysis model must be a scenario that could physically occur.

Question 2

A ——— is a stochastic process with sequential variables, where the expected value of each variable is
the same a I independent of previous observations.

O Dirichle

O Gamma

O Martingale

O Pascal

Question 3

Which of the following is most likely to make your simulation software run slower?

O Using Multiple CPUs if your simulation software offers this

O Tuming off the Update Display feature if your Monte Carlo add-in has that ability

O Running bootstrap analyses and Bayesian distribution calculations in a separate spreadsheet when you
are estimating incorrelated parameters

O Using the VoseCumulA(, VoseDiscrete(), VoseDUniform(, VoseRelative() and VoseHistogram()

distributions with large rays if possible

Question 4

Which of the following is most likely true regarding an event tree?

O An event tree fails to be intuitive due to its complexity.

O An event depicts a probabilistic event without any reference to its impact.

O An event trees start from the right with a node and arrows to the left indicating possible outcomes.

O An event tree offers a way to describe a sequence of probabilistic events, together with their
probabilities and impacts.

Question 5

Ifa risk analyst is interested in determining how broad a distribution is, he should analyze a measure of-

O shape

O location

O consistency

Question 6

Which of the following is least likely true regarding calculations relating to moments?

O The mean of the sum of two distributions is equal to the sum of their means.

O The mean of the product of two distributions is equal to the product of their means.
O The variance of the sum of two independent distributions is equal to the sum of their variances.

O The variance of the sum of two independent distributions is equal to the product of their variances.

Question 7

The biggest uncertainty in a risk analysis is:

O associated with the estimation of size of impact of the risk event.

O associated with the estimation of probability of occurrence of a tisk event.

O whether the analyst started off analyzing the right thing and in the right way.

O whether models developed are free from model risks and capable of withstanding stress tests.

Question 8

If a risk analyst is interested in finding where a distribution is centered, he should look at a measure of
——.

O shape

O location

O consistency

Question 9

is a measure of the tailedness of a distribution.

O Mean

O Kartosis

O Quartile

O Percentile
Question 10

The fourth moment about the mean is called the:

O keurtosis

O variance

O percentile

Question 11

Which of the following is/are least likely an element's of an optimization problem?

Output Variable

O Constraints

O Input variables

O Objective function

Question 12

Risk managers must distinguish between inherent risks and residual risks when developing a risk
management strategy. W ic’

the following best describes the difference between inherent risk and residual risk?

O Residual risk is concerned with compliance risks, while inherent risk deals with operational risks.

O Residual risk is concerned with hazard risks, while inherent risk deals with financial risks.

O Residual risk has got nothing to do with the mitigation efforts, while inherent risk decreases as the
mitigation efforts improve.
O Residual risk is the level of risk after the impact of mitigation efforts, while inherent risk is the risk
associated with the busines

»efore any impact of mitigation efforts.

Question 13

The third moment about the mean is called the:

skewness

Question 14

A model includes a time series forecast. Which of the following plots is most useful for graphical
representation of the res ts f

the model?

Otrend

O spider

O histogram

Question 15

is a numerical measurement of the likelihood of an outcome of some stochastic process.

OProbability

O Variability
O Uncertainty

O Opportunity

Question 16

Which of the following theorems is a logical extension of conditional probability arguments?

O Bayes’ Theorem

O Binomial Theorem

O Central Limit Theorem

O Tchebysheff's Theorem

Question 17

The ———— process occurs when one is sampling randomly without replacement from some
population, and where on is

counting the number in that sample that have some particular characteristic.

Question 18

Which of the following is least likely to be associated with risk-analysis softwares?

OsQL

O Crystal Ball

OPERTmaster
Question 19

Which of the following is most likely true if A and B are not mutually exclusive events?

OP(A UB) =P(A) + PB)

OPAU (A) - PB)

OP(A UB) = P(A) + PB) - PAN)

OP(A UB) = P(A) + PB) +P(ANB)

Question 20

Aspit, a risk manager at Pioneer Manufacturers, has changed the country location of a factory to avoid
politcal instability it

country. Which of the following risk management options has been exercised by Arpit in the aforesaid
scenario?

Question 21

Which of the following is least likely true regarding a decision tree?

OA decision tree is like an event tree but includes all possible decision options.

OA decision tree plays an important role in risk analysis for petroleum exploration projects.

OA decision tree sketches the possible decisions that one might make and the outcomes that might
result.
O A decision tree, unlike an event tree, considers only those decisions which lead to positive payoffs.

Question 22

A risk analysis model that separates uncertainty and variability is described as

order.

O first

O second

O fourth

Question 23

Which of the following probability models is most lxely to yield answers faster?

OA probability model that calculates the required probability

OA probability model that simulates the required probability

OA probability model that estimates the impact of a risk event

OA probability model that estimates the opportunities from a risk event

Question 24

A decision-maker has to work with the risk analyst precisely to define the questions that need
answering. Which of the fe ov 0

is least likely a consideration while defining the questions to be answered?

O The form of answer is to be discussed with the risk analyst.

O The target audience for the risk analysis needs to be determined.

O Questions that need answering are to be ranked from “critical” down to “interesting,”

O The risk analyst must stay away from prioritizing his projects inespective of their relative importance

Question 25

Assume that you are doing a risk analysis and have made 20 reasonable assumptions conceming your
analysis. Also assu ie i

there is a 95% chance that an assumption made is correct. Which of the following is the closest to the
probability that all the

assumptions made are correct?

00.36

0037

00.63

00.73

Question 26

Stochastic dominance tests are a statistical means of

O calculating the relative kurtosis of two distributions.

O calculating the relative skewness of two distributions.

O determining the variance of one distribution over another.

O determining the superiority of one distribution over another.

Question 27

Guruswamy, a risk manager at Global Finance Company, has allocated extra funds to a project to deal
with the associat«

risks. Which of the following risk management options has been exercised by Guruswamy in the
aforesaid scenario?

O Risk reserve

O Risk transfer

O Risk avoidance

O Risk acceptance

Question 28

Latin hypercube sampling uses a technique known as:

O stratified sampling with replacement

O stratified sampling without replacement.

O convenience sampling with replacement.

O convenience sampling without replacement.

Question 29

Which of the following is most likely to reduce the file size while building a risk model?

O Avoiding use of softwares like ModelRisk

Question 30

Consider the following equations: F(x) = P(X <x) (1) GF(@)) = x (2) Which of the following is least likely
true about the

above-mentioned equations?

OF() obviously ranges from 0 to 1.

O The inverse function G(F(x)) is used to generate random samples from each distribution.

O The cumulative distribution function F(x) denotes the probability P that the variable X will be greater
than or equal to x

O The cumulative distribution function F(x) gives the probability P that the variable X will be less than
or equal to x.