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1. A decision tree has a branch in which a random event may occur. One path on that branch has a positive project impact and one has a negative impact. The probability of the positive path is higher than the probability of the negative path. Should the branch be selected as the primary project path?
No. Since there is a negative path on this branch an alternative branch should be selected that has only positive paths.
Yes. Since the probability of the positive impact path is higher, that branch should be selected.
There is not enough information. The values for probabilities and impacts must be used to calculate a path value that is compared to other paths.
2. EMV is typically paired with what other analysis when doing quantitative project risk analysis?
Decision Tree analysis.
Risk Matrix analysis.
3. What factors are used to calculate an EMV?
The probability of a risk occurring within a task and the new task cost and schedule estimate when it occurs.
The expected cash flow from the project per year and the company’s discount rate.
The probability of a project scenario and the business impact of the project scenario.
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