Task 4 PFMP Practice Questions (Page 3)

Questions 11–15

1. 11foundation · easy

   Which of the following is a primary input to portfolio risk identification?

   • ARisk response plans
   • BWork performance reports
   • CPortfolio strategic plan and component information
   • DRisk register updates
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2. 12application · medium

   A portfolio manager has prioritized a risk that a key technology platform may become obsolete before the end of the portfolio's initiatives. The risk response budget is limited. Which response strategy is most appropriate for this risk?

   • ATransfer the risk by purchasing an insurance policy against technology obsolescence.
   • BExploit the risk by accelerating the initiatives to complete them before the technology becomes obsolete.
   • CAccept the risk and document it, since the budget is limited.
   • DMitigate the risk by investing in training and adopting a flexible architecture that allows for easier technology transitions.
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4. 13application · medium

   A portfolio manager has implemented a risk response to mitigate a market risk by diversifying the portfolio. After six months, the market has changed, and the diversification is no longer as effective. What should the portfolio manager do?

   • AKeep the diversification strategy unchanged because it was approved by the board.
   • BClose the risk because the response was implemented.
   • CIncrease the portfolio's risk tolerance to accommodate the reduced effectiveness.
   • DReview the risk response's effectiveness and adjust the diversification strategy as needed.
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5. 14foundation · easy

   In the context of portfolio risk response development, what does the 'accept' strategy involve?

   • AEliminating the risk entirely
   • BTransferring the risk to a third party
   • CTaking no action unless the risk occurs
   • DReducing the probability of the risk
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6. 15application · medium

   A portfolio manager is analyzing risks across a portfolio of IT and business initiatives. A cybersecurity breach risk has been identified. The portfolio manager needs to prioritize this risk against other portfolio risks. Which approach best supports prioritization?

   • ADefer the analysis until a breach actually occurs to avoid wasting effort on uncertain events.
   • BAssign the breach risk a high priority because cybersecurity threats are always critical.
   • CAsk each initiative manager to rate the risk on a scale of 1 to 5 and then average the scores.
   • DAssess the likelihood and impact of the breach risk on each initiative and aggregate the results to determine portfolio-level exposure.
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