All,

The following PMP® exam sample question is taken from http://www.free-pm-exam-questions.com - The answer is at the very bottom:

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Question: You are managing a construction project. You have just been intimated that it is likely to rain heavily during the next week. This can delay your project by a week and you will miss a deadline. This risk will cost you a potential impact of $50,000 if it happens. The probability of the occurrence of this risk is 75%. What is the expected value for this risk?                                                                                                                  

            A.        37500                                                                                                 

            B.        -37500                                                                                                

            C.        50000                                                                                                 

            D.        -50000                                                                                                

Hint: Calculate the expected value by EMV formula. Also note that threats are treated as negative numbers.                 

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Explanation:   EMV for a risk is calculated by multiplying the value of its impact by its probability of occurrence. This will result in 75% * -$50,000 = -$37,500.

Until next time,
Cornelius Fichtner, PMP
The Project Management PrepCast™ - http://www.project-management-prepcast.com
The Project Management Podcast™ - http://www.project-management-podcast.com

The Correct Answer is D.