ITPEC FE Morning April 2023 Question 41
ITPEC FE Morning April 2023 — Question 41 of 80
Annual Loss Expectancy (ALE) — calculate expected yearly loss from a risk.
Given:
- Asset Value (AV) = $200,000
- Exposure Factor (EF) = 20% = 0.2
- Annual Rate of Occurrence (ARO) = 0.5
Step 1 — Single Loss Expectancy:
- SLE = AV × EF = $200,000 × 0.2 = $40,000
Step 2 — Annual Loss Expectancy:
- ALE = SLE × ARO = $40,000 × 0.5 = $20,000
Answer: (a) $20,000
Why not others:
- (b) 40,000 — this is SLE only, missing the ARO multiplier
- (c) 80,000 — no valid combination produces this
- (d) 100,000 — uses AV × ARO, ignoring exposure factor
Key formula: ALE = AV × EF × ARO. Common trap: stopping at SLE without applying ARO.
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