Question 1

The profile model plots a graph on a(n):

Accepted Answer

The profile model typically plots a graph on a risk-return pair of axes, which is commonly used in finance and investment to assess the trade-off between risk and potential return.

Question 2

The Analytical Hierarchy Process elegantly addresses scaling issues in criteria and negative utility in alternative scores.

Accepted Answer

The Analytical Hierarchy Process (AHP) primarily deals with scaling issues through pairwise comparisons and ratio scales but does not inherently address negative utility in alternative scores; it focuses on positive pairwise comparisons and priorities.

Question 3

The first step in the Analytical Hierarchy Process:

Accepted Answer

The first step in the Analytical Hierarchy Process is to construct a hierarchy of criteria and subcriteria. This involves identifying and organizing the different factors that will be considered in the decision-making process. Once this hierarchy is established, the decision makers can move on to the next steps of the process, which involve assigning weights and priorities to each criterion, evaluating alternatives, and making a final decision.

Question 4

Which statement about the use of the profile model is BEST?

Accepted Answer

The statement that for a given level of risk, a positive move on the return axes would indicate a superior project is the best choice. This statement accurately describes how the profile model works - it allows companies to evaluate potential projects based on their level of risk and potential return. The efficient frontier is not necessarily at 100% return and 0% risk, and the scale used for the model can vary depending on the specific variables being evaluated. The model does not require calculation of a percentage risk for each project; instead, it allows for a comparison of the risk and return potential of different projects.

Question 5

Describe any four types of risk that projects may hold.

Accepted Answer

The answer of Describe any four types of risk that...

Question 6

The Analytical Hierarchy Process is used to decide among three projects that we'll call A,B,and C.The total score for project A is .650,for project B is .514,and for project C is .321.Which of the following statements is BEST?

Accepted Answer

The total scores do not necessarily need to sum to 1.00 in the Analytical Hierarchy Process, as they are relative weights assigned to the projects. Therefore, statement B is incorrect. Statement C and D are irrelevant and incorrect. Statement A is the best choice as it summarizes the comparison between project A and project C given their respective total scores. However, it is not accurate to say that project A is exactly twice as good as project C.

Question 7

The pairwise comparison approach:

Accepted Answer

Pairwise comparison is a method used to assign weights to subcriteria by comparing them in pairs to judge which is more important.

Question 8

The efficient frontier in a profile model is the set of options that offers a maximum return for a given level of risk or a minimum risk for every level of return.

Accepted Answer

This statement is true. The efficient frontier is a graph that represents the optimal portfolio of investments that offers the best possible combination of return and risk. The points on the efficient frontier represent portfolios that offer either the highest possible return for a given level of risk, or the lowest possible risk for a given level of return. The goal of portfolio management is to construct a portfolio that lies on the efficient frontier, based on the investor's risk/return preferences.

Question 9

A simple scoring model for project evaluation requires:

Accepted Answer

The answer of A simple scoring model for project evaluation...

Question 10

The simple scoring model has this advantage over a checklist model for screening projects.

Accepted Answer

The advantage of the simple scoring model over a checklist model is that it allows decision makers to treat one criterion as more important than another. The scaling model ensures a reasonable link between the selected and weighted criteria and the business objectives, which is a characteristic of both the scoring and checklist models. The accuracy percentages mentioned in option D are not necessarily true for all situations and cannot be proven without context. Option A is not a specific advantage of the simple scoring model.

Question 11

A simple scoring model is used to decide among three projects that we'll call A,B,and C.The total score for project A is 30,for project B is 20,and for project C is 10.Which of the following statements is BEST?

Accepted Answer

Given the scoring model, Project A has the highest score (30), indicating it is the best choice among the three for the company at this point in time, making option D correct. The other options make assumptions about the benefits relative to the scores, which is not directly supported by the information provided.

Question 12

Describe or define any four important attributes for screening models used to evaluate projects.

Accepted Answer

The answer of Describe or define any four important attributes...

Question 13

A checklist screening model does NOT consider:

Accepted Answer

Checklist screening models typically do not weigh criteria by importance; they simply check for the presence or absence of certain factors without assigning relative weights.

Question 14

The Analytic Hierarchy Process is being employed in a project selection decision.One major criteria,cost,receives a weighting value of 40%,which is split into short term (50%),intermediate term (30%),and long term (20%).Which of these statements is BEST?

Accepted Answer

Intermediate-term cost receives a weighting of 12% because it is 30% of the 40% allocated to the major criterion of cost (0.30 * 0.40 = 0.12 or 12%).

Question 15

Which statement about the Analytical Hierarchy Process is FALSE?

Accepted Answer

This statement is false because AHP is used to evaluate and select positive outcomes among a set of options. It is not used to capture options that do not yield positive outcomes.

Question 16

The simplest method of project screening and selection is developing a list of criteria that pertain to the choice of projects and then applying them to alternatives.

Accepted Answer

This statement is true. Developing a list of criteria and applying them to alternatives is a common method of project screening and selection.

Question 17

The efficient frontier in project management is the set of portfolio options that offer:

Accepted Answer

The efficient frontier in project management is focused on achieving a maximum return for a minimum risk, which is option C. This means that within the set of portfolio options, the projects with the best potential return are selected while also considering the level of risk involved. Option A and B do not reflect the objective of the efficient frontier, and option D suggests taking on a maximum risk, which would not be a desirable approach in portfolio management.

Question 18

Provide an example of a numeric and non-numeric project selection model and indicate what advantage each might hold over the other.

Accepted Answer

The answer of Provide an example of a numeric and...

Question 19

A project manager is using a simple scoring model to decide which of four projects is best,given the company's limited resources.The criteria,importance weights,and scores for each are shown in the table.Which project should be chosen? $$\begin{array} { | l | l | l | l | } 
\hline & & \text { Irportance } & \
\text { Project } & \text { Criterin } & \text { Weight } & \text { Score } \
\hline & & & \
\hline & 1 & 1 & 2 \
\hline\text { White } & 2 & 2 & 2 \ 
\hline & 3 & 3 & 3 \
\hline & & & \
\hline & 1 & 1 & 3 \
\hline \text { Pinkman } & 2 & 2 & 3 \
\hline & 3 & 3 & 2 \
\hline & & & \
\hline & 1 & 1 & 3 \
\hline \text { Fring } & 2 & 2 & 2 \
\hline & 3 & 3 & 3 \
\hline & & & \
\hline & 1 & 1 & 3 \
\hline \text { Salamanca } & 2 & 2 & 1 \
\hline & 3 & 3 & 3 \
\hline
\end{array}$$

Accepted Answer

To determine the best project, multiply each score by its importance weight and sum these products for each project. For Project White, the total is $1*2 + 2*2 + 3*3 = 17$. For Project Pinkman, it's $1*3 + 2*3 + 3*2 = 15$. For Project Fring, it's $1*3 + 2*2 + 3*3 = 18$. For Project Salamanca, it's $1*3 + 2*1 + 3*3 = 14$. Project Fring has the highest total score (18), making it the best choice.

Question 20

A project manager is using a simple scoring model to decide which of four projects is best,given the company's limited resources.The criteria,importance weights,and scores for each are shown in the table.Which project should be chosen? $$\begin{array} { | l | l | l | l | } 
\hline & & \text { Impartance } & \
 \text { Project } & \text { Criterin } &\text {Weight}& \text { Score } \
\hline & & & \
\hline & 1 & 1 & 3 \
\hline \text { Greenlight }&2 & 2 & 2 \ 
\hline &3 & 3 & 1 \
\hline & & & \
\hline &1 & 1 & 2 \
\hline \text { Runway }& 2& 2 & 1 \ 
\hline &3 & 3 & 3 \
\hline & & & \
\hline &1 & 1 & 1 \
\hline \mathbf{X}& 2 & 2 & 2 \ 
\hline & 3 & 3 & 2 \
\hline & & &  \
\hline & 1 & 1 & 2 \
\hline\text { Ilevomit } & 2 & 2 & 2 \ 
\hline & 3 & 3 & 2 \
\hline
\end{array}$$

Accepted Answer

Project Runway has the highest score of 71 out of 100, which means it has the highest overall performance based on the given criteria and importance weights. Therefore, it should be chosen as the best project for the company's limited resources.

Quiz 3: Project Selection and Portfolio Management

The profile model plots a graph on a(n) :