Question 1

______ is a modeling technique for emulating a process,usually conducted a considerable number of times to understand the process better and measure its outcomes under different policies.
A)Simulation
B)Project management
C)Projectizing
D)Modeling

Accepted Answer

Simulation is a modeling technique that creates a virtual environment to imitate a process or system. This allows for the testing of different scenarios and policies to evaluate their potential outcomes. The process is repeated numerous times to better understand the variations in potential outcomes. Project management and projectizing are related to organizing and leading projects, while modeling is a more general term that could refer to any type of representation or simplification of a real-world process or system.

Question 2

Which of the following is not a disadvantage of the discounted cash flow approach to project selection?
A)It cannot account for project risk
B)It ignores all nonmonetary factors
C)It is strongly biased toward short-term solutions
D)It is highly sensitive to data errors in the early years of a project

Accepted Answer

The answer of Which of the following is not a...

Question 3

Occasionally,organizations will approve projects that are forecast to lose money when fully costed and sometimes even when only direct costed.Which of the following is not a good reason for doing this.
A)Acquire knowledge concerning a specific or new technology
B)Get the organization's "foot in the door"
C)Improve their competitive position
D)They plan on cutting corners on work and material,or forcing subsequent contract changes to make up the cost

Accepted Answer

Cutting corners on work and material or forcing subsequent contract changes to make up the cost is unethical and can damage the organization's reputation. It is not a good reason to approve a project that is forecast to lose money. A, B, and C, however, may be valid reasons for such a decision.

Question 4

Which of the following should not be members of the project council?
A)Senior management
B)Accounting department
C)Project owners or sponsors of major projects
D)Head of the project management office

Accepted Answer

The project council should consist of key stakeholders who have significant influence on the project's success. This includes senior management, project owners/sponsors, and the head of the project management office. The accounting department may have a role to play in providing financial data, but they should not be members of the project council as they do not have direct influence on the project's outcomes.

Question 5

The discounted cash flow method determines the net present value of all cash flows by discounting them by the __________.
A)hurdle rate
B)acceptable rate
C)internal rate of return
D)net present value

Accepted Answer

The discounted cash flow method involves discounting all cash flows by the hurdle rate or required rate of return, which represents the opportunity cost of investing capital elsewhere. The net present value is then determined by subtracting the initial investment from the total present value of cash flows. Choice B is incorrect because there is no such thing as an "acceptable rate" in finance. Choice C is incorrect because the internal rate of return is a different method for evaluating investments, not a discount rate for the discounted cash flow method. Choice D is incorrect because the net present value is the result of the discounted cash flow analysis, not a discount rate.

Question 6

According to research by Sanchez and Robert (2010),which of the following is not a reason why strategic benefits may be difficult to appraise?
A)Not immediately realized
B)Difficult to quantify
C)May be confounded with other factors
D)Easy to plan for when they occur

Accepted Answer

The statement "Easy to plan for when they occur" is not a reason why strategic benefits may be difficult to appraise. The other options (A, B, and C) all highlight potential challenges in appraising strategic benefits.

Question 7

Wheelwright identified four separate categories of projects.Which of the following are not one of those categories?
A)Sacred cow projects
B)Platform projects
C)Breakthrough projects
D)R&D projects

Accepted Answer

Sacred cow projects are not one of the categories identified by Wheelwright. The categories are platform projects, breakthrough projects, R&D projects, and derivative projects.

Question 8

In a project portfolio,a project that involves a new technology or even a disruptive technology that is known to the industry would serve as an example of a __________ project.
A)breakthrough
B)R&D
C)platform
D)derivative

Accepted Answer

A project that involves a new or disruptive technology that is known to the industry is typically classified as a breakthrough project. These types of projects are often high-risk, high-reward ventures that can change the way an industry operates. R&D projects typically involve the development of new products, technologies, or processes. Platform projects typically involve the creation of a common infrastructure or system that can be used for multiple projects. Derivative projects typically involve the modification or improvement of existing products or technologies.

Question 9

A technique useful for developing numeric values that are equivalent to subjective,verbal measures of relative value is the __________.
A)Delphi system
B)expert system
C)portfolio
D)simulation

Accepted Answer

The Delphi system is a technique that involves obtaining feedback from a panel of experts in a particular field through a series of questionnaires and feedback sessions. This approach can be used to develop numeric values that are equivalent to subjective, verbal measures of relative value by aggregating the opinions of the experts and using statistical techniques to derive consensus values. Other options such as expert systems, portfolios, and simulations may be useful for other purposes, but they are not specifically designed for this task.

Question 10

Which of the following is not a disadvantage that favors the use of weighted scoring models?
A)Scores are relative measures
B)Easy to include too many factors
C)Can handle non-numeric criteria
D)Can only include profits in a non-numeric fashion

Accepted Answer

The ability to handle non-numeric criteria is not a disadvantage but rather an advantage of weighted scoring models. Option A is a disadvantage as scores are relative and may not give accurate measurements. Option B is a disadvantage as including too many factors may lead to complexity and ambiguity. Option D is also a disadvantage as profits are usually a numeric criterion and cannot be included in a non-numeric way.

Question 11

Firms usually have two or more projects and this collection of projects is referred to as __________.
A)a portfolio
B)an initiation
C)a program
D)a stochastic model

Accepted Answer

A collection of projects is commonly referred to as a portfolio. This is the best choice among the options given. "Initiation" refers to the beginning stage of a project, "program" is a set of related projects that are managed together, and "stochastic model" refers to a mathematical model that takes into account randomness and probability distributions.

Question 12

Scoring models are most often used to overcome this disadvantage of profitability models.
A)The inability to account for the time value of money.
B)The inability to account for project results beyond the payback period.
C)The inability to account for multiple decision criteria.
D)The inability to account for cash flow.

Accepted Answer

Scoring models allow for the consideration of multiple decision criteria, which profitability models may not be able to accommodate. While profitability models may only focus on the financial return of a project, scoring models can weigh various factors such as environmental impact, social responsibility, and customer satisfaction. This makes them a more comprehensive tool for decision-making.

Question 13

Project Typhoon has a net present value of $10,000 and a profitability index of 1.01.Project Cyclone has a net present value of $10,000 and a profitability index of 1.10.Project Surf'sUp has a net present value of $10,000 and a profitability index of 1.05.If only one project could be undertaken,the organization should select __________.
A)Project Typhoon
B)Project Cyclone
C)Project Surf'sUp
D)Not enough information is provided

Accepted Answer

The profitability index indicates the return per dollar invested, so Project Cyclone has the highest return per dollar invested at 1.10. Therefore, it would be the best choice to undertake if only one project could be chosen.

Question 14

Which of the following demonstrates the quality of realism required of a project selection model?
A)It does not require special interpretation,data that are difficult to acquire,or excessive personnel.
B)It gives valid results within the range of conditions that the firm might experience.
C)It reflects the multiple objectives of both the firm and its managers.
D)It deals with situations both internal and external to the project.

Accepted Answer

The answer of Which of the following demonstrates the quality...

Question 15

In a project portfolio,__________ projects have objectives or deliverables that are only incrementally different in both product and process from existing offerings.
A)breakthrough
B)R&D
C)platform
D)derivative

Accepted Answer

Derivative projects are those that have objectives or deliverables that are only incrementally different in both product and process from existing offerings. This means that they are based on existing products or technology and aim to improve or enhance them in some way. Breakthrough projects, on the other hand, are those that involve significant advancements or disruptive innovations, while platform projects involve creating a base technology or product that can be used across multiple projects. R&D projects are focused on research and development of new technologies, products, or processes.

Question 16

Real options seek to reduce which of the following risks in projects?
A)political
B)environmental
C)technological and commercial
D)sociological

Accepted Answer

Real options aim to reduce technological and commercial risks in projects by providing flexibility and allowing decision-makers to delay, expand, contract or abandon projects based on changing market or technological conditions. Real options do not directly address political, environmental or sociological risks.

Question 17

When the decision maker's information is not complete,he / she will have to make a decision under conditions of __________.
A)proof
B)uncertainty
C)management
D)risk mitigation

Accepted Answer

When the decision maker's information is not complete, they face uncertainty, which means they do not know the probability of different outcomes. They may have to rely on intuition, judgment, or past experiences to make decisions under these conditions. Uncertainty is different from risk, which involves known probabilities or distributions of outcomes.

Question 18

A project has four criteria,represented by A-D.There weights are 0.1,0.2,0.4,and 0.3.A particular project has scores of 4,5,8,and 9 respectively.What is its total score for the project?
A)6.5
B)7.1
C)7.3
D)26

Accepted Answer

To calculate the total score for the project, we need to multiply each score by its corresponding weight and then add all the results. So, the total score for this project would be:

(0.1 x 4) + (0.2 x 5) + (0.4 x 8) + (0.3 x 9) = 0.4 + 1 + 3.2 + 2.7 = 7.3

Therefore, the best choice is C.

Question 19

Financial forecasts are reported as __________ financial statements.
A)final
B)initial
C)pro forma
D)hypothetical

Accepted Answer

Financial forecasts are typically reported as pro forma financial statements, which are projections of expected financial performance based on assumptions and estimates. These statements are meant to provide insight into the company's potential future performance and help guide decision-making. Final financial statements reflect actual results and are prepared after the end of an accounting period, while initial and hypothetical financial statements are not commonly used terms in accounting.

Question 20

Which of the following is not an advantage that favors the use of weighted scoring models?
A)Multiple objectives can be considered.
B)Decision makers are compelled to stick with the decision once it has been made.
C)The models can be adapted to changes in managerial philosophy.
D)They can help avoid a short-term focus on profitability.

Accepted Answer

Weighted scoring models do not necessarily compel decision makers to stick with the decision once it has been made. In fact, one of the advantages of these models is their flexibility and adaptability to changes in managerial philosophy. The other three options are advantages that do favor the use of weighted scoring models.

Quiz 2: Strategic Management and Project Selection

______ is a modeling technique for emulating a process,usually conducted a considerable number of times to understand the process better and measure its outcomes under different policies.

Which of the following is not a disadvantage of the discounted cash flow approach to project selection?

Occasionally,organizations will approve projects that are forecast to lose money when fully costed and sometimes even when only direct costed.Which of the following is not a good reason for doing this.

Which of the following should not be members of the project council?

The discounted cash flow method determines the net present value of all cash flows by discounting them by the __________.

According to research by Sanchez and Robert (2010) ,which of the following is not a reason why strategic benefits may be difficult to appraise?

Wheelwright identified four separate categories of projects.Which of the following are not one of those categories?

In a project portfolio,a project that involves a new technology or even a disruptive technology that is known to the industry would serve as an example of a __________ project.

A technique useful for developing numeric values that are equivalent to subjective,verbal measures of relative value is the __________.

Which of the following is not a disadvantage that favors the use of weighted scoring models?

Firms usually have two or more projects and this collection of projects is referred to as __________.

Scoring models are most often used to overcome this disadvantage of profitability models.

Which of the following demonstrates the quality of realism required of a project selection model?

In a project portfolio,__________ projects have objectives or deliverables that are only incrementally different in both product and process from existing offerings.

Real options seek to reduce which of the following risks in projects?

When the decision maker's information is not complete,he / she will have to make a decision under conditions of __________.

A project has four criteria,represented by A-D.There weights are 0.1,0.2,0.4,and 0.3.A particular project has scores of 4,5,8,and 9 respectively.What is its total score for the project?

Financial forecasts are reported as __________ financial statements.

Which of the following is not an advantage that favors the use of weighted scoring models?