Practice Test 1 ◾ 119
29. Your CEO was red because of a decline in the company’s prots by the
Board of Directors. They have now hired a new CEO, who plans to re- shape
the portfolio and has changed the company’s strategic goals and objectives.
The new CEO will continue the existing product line of soap products that
the company has manufactured for the past 50years but now will manu-
facture new products to focus on the baby boomer generation as they retire
but desire to maintain a youthful appearance. It also will offer other prod-
ucts to new high school and college graduates who want to appear older. As
the portfolio manager you should:
a. Determine the overall impact to the portfolio performance
b. Determine investment requirements to move to these markets
c. Assess the competencies of the existing staff to support these new
products
d. Evaluate whether the new products can be outsourced to reduce time to
market
30. Your dry foods company is faced with new regulations that dramatically
change what is to be included in each product to put on redesigned food
labels. The objective of the regulations is to help reduce obesity in the
citizens in your country so they are aware of trans- fat food. You must be in
complete compliance with these regulations in six months. As the portfolio
manager you must document how you will address these regulations in a:
a. Detailed report to the Portfolio Review Board
b. Meeting with all employees as some existing components will be
deferred to meet the requirements
c. Portfolio performance plan
d. Portfolio communications plan
31. Being a portfolio manager, you realize that dening value differs among
organizations based on the type of organization and its strategic goals and
objectives. However, you know a value measurement framework is helpful
as it:
a. Compares expected value across components
b. Shows value in terms of tangible benets
c. Indicates how to best weight and score a component to authorize it
d. Sets a baseline for a component’s expected value
120 ◾ PfMP® Exam Practice Tests and Study Guide
32. Assume you are creating a roadmap for your portfolio and will present it
to key stakeholders and then to the Portfolio Review Board. You realize
you will be adding additional detail to it, but you also believe its graphical
format will be useful. In developing it, you decide to reference prioritization,
dependencies, and organizational areas so you should consult the:
a. Organization’s strategic plan
b. Portfolio strategic plan
c. Portfolio charter
d. Portfolio management plan
33. Assume you are holding interviews with internal and external stakehold-
ers and subject matter experts to obtain their views on the probability that
certain risks may occur and also the effect on the portfolio’s objectives if the
risks do occur—either positive or negative. As you conduct these interviews,
a best practice to follow is to:
a. Ask questions concerning potential outcomes concerning the portfolio
success criteria
b. Determine whether the interviewees feel rebalancing is needed to bal-
ance portfolio risks
c. Document any assumptions
d. Also compare recent portfolio changes
34. After the second shutdown of the Government, your Agency Administrator
realized that some essential programs had to continue even during the shut-
down, some existing work along with some programs and projects in the
pipeline perhaps were not needed, and resources may require reallocation.
This example shows the:
a. Need to reconsider portfolio selection criteria
b. Need to revise the portfolio mix
c. Importance of regular reviews by the Portfolio Review Committee
d. Need to reevaluate the entire portfolio management cycle
35. Assume you are a member of your company’s Portfolio Review Board. Your
Board meets quarterly to determine which new components to undertake
and selects them even if it means the portfolio then will require rebalancing.
As you consider the proposed business case for a component and assess the
suggestions of the other Board members, a key factor is:
a. The depth of the proposal in terms of identication of key benets
b. Total available resources
c. Overall stakeholder interest
d. Component feasibility studies
Practice Test 1 ◾ 121
36. In preparing your communications matrix, you identied ve communica-
tion areas. One is portfolio governance decisions. A communication vehicle
for these decisions is:
a. E- mails
b. Scorecards
c. Internal portal
d. PMO repository
37. Assume you are putting together for the Portfolio Review Board several
options for consideration of potential components and current components.
You are using an approach with different probabilities to determine out-
comes and EMV. Which of the following would you recommend realizing
Components A and B are new, while C and D are in progress:
Probability
Component A Component B Component C Component D
Outcome EMV Outcome EMV Outcome EMV Outcome EMV
1 50% $15,000 $7,500 $13,000 $6,500 $20,000 $10,000 $10,000 $5,000
2 30% $17,000 $5,100 $15,000 $4,500 $12,000 $3,600 $8,500 $2,250
3 20% $20,000 $4,000 $15,000 $3,000 $10,000 $2,000 $5,000 $1,000
a. Component A
b. Component B
c. Component C
d. Component D
38. While the portfolio management plan is essential to ensure both effective
and efcient portfolio management, when managing strategic change, it is
incumbent on the portfolio manager to:
a. Focus on its escalation policies as issues arise
b. Ensure there is a dened process for change control and management in it
c. Dene the key roles and responsibilities of stakeholders
d. Reassess and update it if needed
122 ◾ PfMP® Exam Practice Tests and Study Guide
39. Assume you are responsible for portfolio management in your organization.
You are responsible for managing the value of the portfolio and for recom-
mending changes to your Portfolio Review Board to enhance its value. To do
so, you monitor benets, interdependencies between components, changes,
and responsibilities and accountabilities as stated in the:
a. Portfolio charter
b. Portfolio management plan
c. Portfolio performance plan
d. Portfolio strategic plan
40. As you work to determine which of four possible components to optimize the
portfolio, assume you are using the internal rate of return as the key crite-
rion to make your recommendation. Only one new component can be added
based on nancial constraints. Each of the four potential components has
benets that support the strategic plan. The following are the available data:
Project A IRR Program A IRR Program B IRR Project B IRR
42% 40% 36% 33%
You recommend:
a. Project A
b. Program A
c. Program B
d. Project B
41. Assume you are working in a division in your country’s Department of
Interior. The Department is set up in Bureaus, and your work falls within
Natural Resources. Your division is the Water Resource Division. You are
responsible as the portfolio manager for the work in this Division. As you
work on the portfolio for the upcoming year, you point out to the members
of the Portfolio Review Committee that:
a. The projects in the portfolio have interdependencies between them
b. Your portfolio reects your Division’s objectives
c. Each program and project in the portfolio have related objectives
d. Your portfolio addresses different strategies than those in other parts of
the Department
Practice Test 1 ◾ 123
42. Assume you are the portfolio manager for a public sector organization, and
it has been part of a public- private partnership for three years for highway
projects. You are making recommendations as to the next program to under-
take. The head of your Highway Department in your State is questioning
whether the partnership is the best approach or whether it is best to work
on its own. You asked the Marketing manager for assistance, and she pre-
pared a value- for- money analysis. This approach is useful in that it:
a. Enables an apples- to- apples comparison of the two approaches
b. Provides a real options approach
c. Supports a value- to- organizational vision approach
d. Computes the expected monetary value of the two approaches
43. Because of the ongoing and iterative nature of portfolio management, the
processes in it are continually repeated as new components are added, and
others are completed or terminated. Revisions are constant given complexity,
risks, and the rate of change. As you work to optimize the portfolio, it is
helpful to:
a. Assign components to predened categories
b. Prepare a owchart
c. Organize ideas from stakeholders into logical groupings
d. Perform a structure analysis of roles and responsibilities
44. A useful guideline to identify the portfolio and sub- portfolios is the:
a. Portfolio charter
b. Portfolio performance plan
c. Portfolio structure
d. Roadmap
45. Programs and projects in your company, one of the largest banks in the
world, are required to submit metrics as to their individual progress each
month. To simplify the collection and reporting process, you held interviews
with members of the Portfolio Review Board to see their areas of greatest
interest and also with program and project managers to determine how dif-
cult it would be to collect the data. You then selected 10 possible metrics to
the Board, with a goal that ve would be regularly reported. It is important
to note that:
a. Quantitative metrics are preferable
b. The value is realized when components are used
c. Customer satisfaction is the most important goal
d. If components have interdependencies with other components, their met-
rics should be reported as a group
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