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Free IIA-CIA-Part3 Exam Braindumps (page: 18)

Page 18 of 390
PDF with 1555 Questions

Which of the following is not true about simu-lation models that use Monte Carlo processes?

  1. They are deterministic in nature.
  2. They may involve sampling.
  3. They mathematically estimate what actual performance would be.
  4. They emulate stochastic systems.

Answer(s): A

Explanation:

The Monte Carlo simulation is often used in computer modeling to generate the individual values for a random variable. The performance of a quantitative model under uncertainty may be investigated by randomly selecting values for each variable in the model (based on the probability distribution of each variable) and then calculating the value of the solution. Because Monte Carlo processes use the laws of probability to generate values for random variables, simulations using them are probabilistic, not deterministic.



The sales manager for a builder of custom yachts developed the following conditional table for annual production and sales:



According to the table, how many yachts should be built?

  1. 10
  2. 20
  3. 30
  4. 50

Answer(s): C

Explanation:

To achieve the maximum expected profit. 30 yachts should be built. For each level of production, multiply the probability of demand by the expected profit. The computation for the maximum is: 0.1 (-US $10) + 0.2($10) + 0.5($30) + 0.2($30) = US $22.



Only two companies manufacture Product A. The finished product is identical regardless of which company manufactures it. The cost to manufacture Product A is US$1, and the selling price is US $2. One company considers reducing the price to achieve 100% market share but fears the other company will respond by further reducing the price. Such a scenario would involve a:

  1. No-win strategy.
  2. Dual-win strategy.
  3. One win-one lose strategy.
  4. Neutral strategy.

Answer(s): A

Explanation:

If both firms reduce the selling price of Product A, neither will gain sales and the resultant price war will cause both firms to earn lower profits. This outcome is inevitable when reduced profit margins do not result in a significant increase in sales. This is classified as a no-win strategy.



The decision rule that selects the strategy with the highest utility payoff if the worst state of nature occurs is the:

  1. Minimize regret rule.
  2. Maximize utility rule.
  3. Maximinrule.
  4. Maximaxrule.

Answer(s): C

Explanation:

The maximin rule determines the minimum payoff for each decision and then chooses the decision with the maximum minimum payoff. It is a conservative criterion adopted by risk-averse players, that is, those for whom the disutility of a loss exceeds the utility of an equal gain.



Page 18 of 390



Post your Comments and Discuss IIA IIA-CIA-Part3 exam with other Community members:

Gosia commented on December 16, 2024
Hi, did you have the same questions on exams?
POLAND
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Becky commented on June 23, 2024
Exam collections here awesome. Kudos
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Shehata mohamed commented on December 13, 2023
Many thanks cia part 3
Anonymous
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IIA-CIA-Part3 commented on July 16, 2023
CIA Exam Part Three: Business Knowledge for Internal Auditing
Anonymous
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KC commented on December 20, 2017
Very helpful. For a another braindump I paid almost 4 times this and got the same material. Then I came across this site. Can't believe the same set of questions and answers are sold for almost a fraction of a price with much better quality and support.
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