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CIMA Risk Management P3 Question # 14 Topic 2 Discussion

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CIMA Risk Management P3 Question # 14 Topic 2 Discussion

P3 Exam Topic 2 Question 14 Discussion:
Question #: 14
Topic #: 2

ERT is choosing between two maintenance policies for its vehicles. The outcomes of these policies are difficult to predict and so ERT has run a simu-lation of both.

Policy 1 has an expected annual cost of $400,000 per year, with a standard deviation of $80,000.

Policy 2 has an expected value of $350,000, with a standard deviation of $150,000.

Which of the following statements are correct?
A.

Policy 2 is the more risky.

B.

Policy 1 will always be the more expensive in any given period.

C.

Policy 2 is the more likely to cost more than $500,000 in any given year.

D.

Policy 2 has the greater potential upside risk.

E.

Policy 2 is clearly the better policy.

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Actual exam question for CIMA P3 exam by Zephyr59346 at Aug 3, 2025, 12:00:00 AM

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