1. Options
An option is a contract applied to a certain security with defined quantity and price for a defined period of time
option can be call option or put option, and there are option holder and option writer;
Four scenarios:
holder of a call option -> has the right to buy a certain security for certain price at certain time
writer of a call option -> obliged to sell a certain security for certain price at certain time
holder of a put option -> has the right to sell a certain security for certain price at certain time
writer of a put option -> obliged to buy a certain security for certain price at certain time
The holder of either the call or put option pays a "premium" for the right, and the writer of the call or put option receives the "premium".
To be "long" on either call or put option is to own the call or put option (holder)
To be "short" on either call or put option is to sell the call or put option(writer)
Sunday, March 28, 2010
Tuesday, March 2, 2010
PMP Question Series: closing process group
(1) All technical work is done on the project. Which of the following remains to be done?
(a) verify scope (b) complete lessons learned (x)
--> NOTE: (a) is done in monitoring and control process
(2) The customer on a project tells the PM that he has run out of money to pay for the project. What should the PM do first?
(a) shift more of the work to later in the schedule to allow for the customer to get the funds
(b) stop work
(c) release part of the project team
(d) close project of phase (x)
Note: every project must be closed as closure provides benefit to the performing organization.
(3) The customer has accepted the completed project scope. However, the lesson learned required by the project management office have not been completed. What is the status of the project?
--> Incomplete until all project and and product deliverables are complete and accepted. Note, lessons learned are project management deliverables
(4) The project is not completed until:
(a) the project scope is completed, administrative closure is complete, and payment is received
(b) Formal acceptance is received, and other requirements for project closure as stated in the contract (x)
(5) The project is doing well. Just when the project entered its second phase, a team member on a noncritical path activity announced she was leaving the company. The float of the activity L changed from two to four day. The last quality review showed that the project has made use of the results of the last design of experiments. based on this information, what should the PM do next?
(a) complete the closure of the first phase (wrong answer since it should have been closed)
(b) review the management plan (x)
(6) which of the following regarding performance reporting is correct?
-->it is done during project monitoring and controlling , and project closure
(7) the normal response to a force majeure is to give an extension of time, not to terminate. however, the procurement process can be closed if the performing organization could not even have the time / resource to do it
(8) all the following are always part of the close project/phase process except:
(a) complete lesson learned (b) updating the archives (c) releasing the team (d) performing closure of the outside contract (x)
--> closure of procurement can happen before the project as a whole is closed.
(9) when is the earliest time administrative closure should be completed?
a) at the end of project
b) at the end of each project phase (x)
--> NOTE: if you have divided the project into phases you need to close each project phase
(10) from seller's point of view, the procurement is considered closed when:
a) work is complete and formal acceptance received
b) lesson learned are complete and final payment is received
c) final payment is made
d) archives, administrative closure, and closure requirements as stated in the contract are all completed (x)
(11) close project or phase process is different than the close procurement process in that:
--> close procurements includes an audit, while close project / phase does not
(12) The procurement SOW is completed on a project. However, the customer is not happy because she wants additional work to be completed. in light of this, what should be done?
-> begin the close procurement process, and sign a new contract for additional work
(13) All the following are reasons to terminate a contract except:
a) breach b) material breach c) default d) nonpayment (x)
NOTE: normally only the buyer will terminate the contract. it does not make sense for a buyer to terminate the contract since the buyer did not make the payment
(14) performance reporting is important during administrative closure in order to:
a) show progress made to the activities
b) gain approval to start the lesson learned
c) prove formal acceptance has been achieved
d) communicate the team's success (x)
NOTE: performance reporting in administrative closure is to report progress made on project
(15) which of the following is an output of the procurement management process?
a) contract b) proposal c) change orders d) formal acceptance (x)
--> this needs to be considered as the output of procurement process as a whole
(16) one of the project objectives for your company was to acquire additional expertise completing a large scale design project. The project is mostly completed when your client terminates the contract. A change in their business means the work is no longer needed. what is the most effective thing to do?
(a) stop work
(b) tell the client that work will stop after it is completed
(c) move to the close project or phase process
(d) complete the project, but do not charge the client for the time(x)
--> the second best answer is (c). however, the company needs to be able to gain expertise, and it can not be done until the project is completed.
(16) a project is completed on time, on budge, and meet all its objectives. The management of one of its functional areas is quite upset because half of his staff quit during the project citing long hours and lack of management support. what is the most correct statement about this project?
a) The functional manager is responsible for his staff and obtaining adequate resource to meet the schedule once it has been set. The project and PM achieved all of its objectives
b) The PM did not obtain adequate resources and did not set a realistic deadline based on the resource available. (x)
(17) The project has been going relatively well, although the project scope has changed more than was expected. The project is now completing one of its phases. of all decisions the sponsor must consider during an end-of-phase review meeting, the most difficult is:
a) authorize the scope change for the next phase
b) authorize the budget increases for the next phase based on scope changes
c) decreasing scope to maintain the budge
d) cancelling the project (x)
NOTE: d) has the biggest impact to the project
(18) It is important to collect project records at the end of the project to:
a) support cost decisions
b) support risks on the project
c) document decisions made on the project
d) recall what happened on the project (x)
Note: c) is not enough since lesson learned need recall what went right, wrong, progress etc
(19) you have just completed the design phase for a client's project and about to enter the implementation phase. All the following need to be done except:
a) lesson learned
b) updating records
c) formal acceptance
d) completion of the product of the project (x)
NOTE: d) needs to be done at the end of the project
(20) which of the following is a common problem in close project /phase process?
a) completing a project charter
b) obtain scope verification
c) completing the quality assurance plan
d) retaining resource to complete the project
NOTE: the common problem is that people start looking for their next project and leave before
administrative closure
(21) what is the best technique to ensure the project work is really complete?
a) procurement audits
b) final performance reporting
c) archive records
d) formal acceptance (x)
NOTE: only formal acceptance ensure that the project is complete
(22) what is the main purpose of the procurement audit?
--> to improve the procurement process. The experience will be transferred to other procurements.
--> procurement audit is basically a lesson-learned about procurement process
(23) The PM is making sure that the product of the project has been completed according to the project management plan. What part of the project management process is he in?
(a) monitoring and control
(b) closing (x)
NOTE: scope verification happens in monitoring and control process. however, the product verification happens at project closing process
(24) what does a lesson learned include?
--> variance and their causes
(25) all the following are required to bring a project to closure except:
a) perform project feedback from team
b) obtain sign-off from customer
c) review project documentation for completeness
d) update the project management plan (x)
NOTE: Project management plan does not need to be updated in project close process
(26) Two team members are currently documenting and verifying the product, while two other team members are updating records, performing an audit, and archiving lesson learned. what activity are the team members engaged in?
a) close project/phase
b) close procurements (x)
NOTE: only close procument process needs a peformance an audit
(27)
(a) verify scope (b) complete lessons learned (x)
--> NOTE: (a) is done in monitoring and control process
(2) The customer on a project tells the PM that he has run out of money to pay for the project. What should the PM do first?
(a) shift more of the work to later in the schedule to allow for the customer to get the funds
(b) stop work
(c) release part of the project team
(d) close project of phase (x)
Note: every project must be closed as closure provides benefit to the performing organization.
(3) The customer has accepted the completed project scope. However, the lesson learned required by the project management office have not been completed. What is the status of the project?
--> Incomplete until all project and and product deliverables are complete and accepted. Note, lessons learned are project management deliverables
(4) The project is not completed until:
(a) the project scope is completed, administrative closure is complete, and payment is received
(b) Formal acceptance is received, and other requirements for project closure as stated in the contract (x)
(5) The project is doing well. Just when the project entered its second phase, a team member on a noncritical path activity announced she was leaving the company. The float of the activity L changed from two to four day. The last quality review showed that the project has made use of the results of the last design of experiments. based on this information, what should the PM do next?
(a) complete the closure of the first phase (wrong answer since it should have been closed)
(b) review the management plan (x)
(6) which of the following regarding performance reporting is correct?
-->it is done during project monitoring and controlling , and project closure
(7) the normal response to a force majeure is to give an extension of time, not to terminate. however, the procurement process can be closed if the performing organization could not even have the time / resource to do it
(8) all the following are always part of the close project/phase process except:
(a) complete lesson learned (b) updating the archives (c) releasing the team (d) performing closure of the outside contract (x)
--> closure of procurement can happen before the project as a whole is closed.
(9) when is the earliest time administrative closure should be completed?
a) at the end of project
b) at the end of each project phase (x)
--> NOTE: if you have divided the project into phases you need to close each project phase
(10) from seller's point of view, the procurement is considered closed when:
a) work is complete and formal acceptance received
b) lesson learned are complete and final payment is received
c) final payment is made
d) archives, administrative closure, and closure requirements as stated in the contract are all completed (x)
(11) close project or phase process is different than the close procurement process in that:
--> close procurements includes an audit, while close project / phase does not
(12) The procurement SOW is completed on a project. However, the customer is not happy because she wants additional work to be completed. in light of this, what should be done?
-> begin the close procurement process, and sign a new contract for additional work
(13) All the following are reasons to terminate a contract except:
a) breach b) material breach c) default d) nonpayment (x)
NOTE: normally only the buyer will terminate the contract. it does not make sense for a buyer to terminate the contract since the buyer did not make the payment
(14) performance reporting is important during administrative closure in order to:
a) show progress made to the activities
b) gain approval to start the lesson learned
c) prove formal acceptance has been achieved
d) communicate the team's success (x)
NOTE: performance reporting in administrative closure is to report progress made on project
(15) which of the following is an output of the procurement management process?
a) contract b) proposal c) change orders d) formal acceptance (x)
--> this needs to be considered as the output of procurement process as a whole
(16) one of the project objectives for your company was to acquire additional expertise completing a large scale design project. The project is mostly completed when your client terminates the contract. A change in their business means the work is no longer needed. what is the most effective thing to do?
(a) stop work
(b) tell the client that work will stop after it is completed
(c) move to the close project or phase process
(d) complete the project, but do not charge the client for the time(x)
--> the second best answer is (c). however, the company needs to be able to gain expertise, and it can not be done until the project is completed.
(16) a project is completed on time, on budge, and meet all its objectives. The management of one of its functional areas is quite upset because half of his staff quit during the project citing long hours and lack of management support. what is the most correct statement about this project?
a) The functional manager is responsible for his staff and obtaining adequate resource to meet the schedule once it has been set. The project and PM achieved all of its objectives
b) The PM did not obtain adequate resources and did not set a realistic deadline based on the resource available. (x)
(17) The project has been going relatively well, although the project scope has changed more than was expected. The project is now completing one of its phases. of all decisions the sponsor must consider during an end-of-phase review meeting, the most difficult is:
a) authorize the scope change for the next phase
b) authorize the budget increases for the next phase based on scope changes
c) decreasing scope to maintain the budge
d) cancelling the project (x)
NOTE: d) has the biggest impact to the project
(18) It is important to collect project records at the end of the project to:
a) support cost decisions
b) support risks on the project
c) document decisions made on the project
d) recall what happened on the project (x)
Note: c) is not enough since lesson learned need recall what went right, wrong, progress etc
(19) you have just completed the design phase for a client's project and about to enter the implementation phase. All the following need to be done except:
a) lesson learned
b) updating records
c) formal acceptance
d) completion of the product of the project (x)
NOTE: d) needs to be done at the end of the project
(20) which of the following is a common problem in close project /phase process?
a) completing a project charter
b) obtain scope verification
c) completing the quality assurance plan
d) retaining resource to complete the project
NOTE: the common problem is that people start looking for their next project and leave before
administrative closure
(21) what is the best technique to ensure the project work is really complete?
a) procurement audits
b) final performance reporting
c) archive records
d) formal acceptance (x)
NOTE: only formal acceptance ensure that the project is complete
(22) what is the main purpose of the procurement audit?
--> to improve the procurement process. The experience will be transferred to other procurements.
--> procurement audit is basically a lesson-learned about procurement process
(23) The PM is making sure that the product of the project has been completed according to the project management plan. What part of the project management process is he in?
(a) monitoring and control
(b) closing (x)
NOTE: scope verification happens in monitoring and control process. however, the product verification happens at project closing process
(24) what does a lesson learned include?
--> variance and their causes
(25) all the following are required to bring a project to closure except:
a) perform project feedback from team
b) obtain sign-off from customer
c) review project documentation for completeness
d) update the project management plan (x)
NOTE: Project management plan does not need to be updated in project close process
(26) Two team members are currently documenting and verifying the product, while two other team members are updating records, performing an audit, and archiving lesson learned. what activity are the team members engaged in?
a) close project/phase
b) close procurements (x)
NOTE: only close procument process needs a peformance an audit
(27)
PMP Question Series: Monitoring and controlling process group
(1) As project progress is tracked according to the project management plan, the PM discovers that final deliverables will be completed two months after the deliverable dates imposed by management. What should the PM do?
(a) Drive the project team to work faster
(b) Recalculate the project schedule and distribute it according to the communications management plan
(c) evaluate the impact on the company of completing this project late.
(c) Look for options with stakeholders using some combination of scaling back work, reevaluating discretionary dependencies, and adding resource (x)
--> (a) is not good solution (b) is not going to solve the problem (c) is not the job of PM
(a) Drive the project team to work faster
(b) Recalculate the project schedule and distribute it according to the communications management plan
(c) evaluate the impact on the company of completing this project late.
(c) Look for options with stakeholders using some combination of scaling back work, reevaluating discretionary dependencies, and adding resource (x)
--> (a) is not good solution (b) is not going to solve the problem (c) is not the job of PM
Saturday, February 27, 2010
PMP Question Series: Intiation process group
(1) PM should have broad base of experience and knowledge. The best candidate of a PM position is to select a person with well-around knowledge on general management, project management, and technical skill
(2) You customer asked for a 2000-call capacity. however, one of your company's technical experts believes a 3000-call capacity could be reached, while another thinks it needs only 1500-call capacity. What is the best thing to do?
->meet with the customer to better understand the reasons behind the 2000-call capacity requirement
(3) which of the following techniques is the best way to determine project objectives?
(a) (x) delphi (b) expert interview
(4) The purpose of project charter:
establishing a project, authorize project manager, including stakeholders' requirements. NOTE: product acceptance criteria is part of project scope statement
(5) A project manager is completing the WBS with the project team, but the session is hard to manager since there are 200 people in the romm representing different departments. Some people who will be working on the project later are talking about other things while earlier work is discussed. what is the problem?
-> The project manager is really managing a program
(6) The role of each stakeholder is determined by the project manager and the stakeholder
(7) Senior management has imposed a project delivery date prior to acceptance of the project scope statement. To whom is the PM most accountable?
-> customer (NOTE, not senior management)
(8) A PM is assigned to a project which has never been done before. The PM has decided to build a basic schedule to detail the work of each part of the current part nears completion. What best describe the PM is doing?
-> The process of progressive elaboration
(9) How is project deliverables defined?
-> They are defined at project onset with input of project stakeholders. They are determined in part by the customer.
(10) You are working on a project to order new buses for a transportation route between two cities. You include a government official as a stakeholder and plan to include meetings with him in WBS. Your manager objects to such activities as unnecessary. What is the best response to your manager?
-> The government official can negatively impact the project
NOTE: the government official could be a stakeholder. But there is no need to involve all stakeholder in WBS.
(11) The skills required for effective project management include knowledge of standards and regulations, understanding the project management, and ?
(a) application area knowledge (b) engineering knowledge (c) software knowledge (d) financial knowledge
-> a
NOTE: application area knowledge encompass b, c, and d
(12) A new pm is having difficulty create a wbs with the team. To alleviate this situation, the PM should ask for help from:
PMO
(13) The project is not going well. there are over 30 stakeholders, and no one can agree on the project objectives. one stakeholder believe the project can achieve a 30% improvement while another believes a 50% improvement is possible. The PM thinks a 10% is more realistic. What is the best course of action?
-> perform a feasibility analysis
(14) Project A has a IRR of 12%. Project B has a benefit-cost-ratio of 1.3. which project would you select?
-> project A
Beneft cost ration of 2.1 means: the payback is 2.1 times the cost
NOTE: IRR of 12% clearly demonstrates the return on investment (ROI). However, benefit-cost-ratio is about revenue / cost. It is impossible to determine if it is better than IRR of 12%.
(15) A PMO can be established to offer services ranging from basic support to total management of all projects.
(16) Project A has a NPV of 70K being done over 6 years. Project B has a NPV of 60K being done over 1 year. Which project would you choose
-> A
NOTE: you simply choose highest NPV since number of years is already taken in consideration
(17) A CEO of a large publishing company desires to improve project management practices. what is the best thing to do?
-> retain the functional organization structure (this is a ongoing and repeatable business process)
(18) A person is writing a document identifying the business need for a project and is including a description of the product created by the project. She includes a list of stakeholders and preassigned resources. What is the role of this person?
-> sponsor or project manager
NOTE: the project charter is issued by the sponsor. The PM may have a role in its creation
(19) What is the role of stakeholders in a project?
--> They help to determine the project constraints and product deliverables.
(20) The project team is working on manufacturing a product, but they are having difficulty creating a project charter. What is the problem?
--> They are working on a process, not a project
(20) A PM has just been assigned to a project and has been given the approved project charter. The first thing the PM must do is:
--> confirm that all the stakeholders have had input to the scope
(21) The stakeholders do not have a role in determining project management plan unless thy are part of the project team
(22) The main focuses of managing a project include: idenfying requirements, establish clear and achievable objectives and balancing competing demands for scope, time, cost etc
(23) You are managing a project that is a joint project between your company and another company. The contract is not finalized, and there has been a great deal of arguing. The project scope has been expanding, cost has been increasing, and the schedule has been lengthening. You hear that the project might be canceled because the other organization withdrew its share of the funding. what is most likely reason that this occurred?
(a) inadequate scope management
(b) lack of sponsor commitment (x)
It is the role of the sponsor to define the initial project and protect it from changes
(2) You customer asked for a 2000-call capacity. however, one of your company's technical experts believes a 3000-call capacity could be reached, while another thinks it needs only 1500-call capacity. What is the best thing to do?
->meet with the customer to better understand the reasons behind the 2000-call capacity requirement
(3) which of the following techniques is the best way to determine project objectives?
(a) (x) delphi (b) expert interview
(4) The purpose of project charter:
establishing a project, authorize project manager, including stakeholders' requirements. NOTE: product acceptance criteria is part of project scope statement
(5) A project manager is completing the WBS with the project team, but the session is hard to manager since there are 200 people in the romm representing different departments. Some people who will be working on the project later are talking about other things while earlier work is discussed. what is the problem?
-> The project manager is really managing a program
(6) The role of each stakeholder is determined by the project manager and the stakeholder
(7) Senior management has imposed a project delivery date prior to acceptance of the project scope statement. To whom is the PM most accountable?
-> customer (NOTE, not senior management)
(8) A PM is assigned to a project which has never been done before. The PM has decided to build a basic schedule to detail the work of each part of the current part nears completion. What best describe the PM is doing?
-> The process of progressive elaboration
(9) How is project deliverables defined?
-> They are defined at project onset with input of project stakeholders. They are determined in part by the customer.
(10) You are working on a project to order new buses for a transportation route between two cities. You include a government official as a stakeholder and plan to include meetings with him in WBS. Your manager objects to such activities as unnecessary. What is the best response to your manager?
-> The government official can negatively impact the project
NOTE: the government official could be a stakeholder. But there is no need to involve all stakeholder in WBS.
(11) The skills required for effective project management include knowledge of standards and regulations, understanding the project management, and ?
(a) application area knowledge (b) engineering knowledge (c) software knowledge (d) financial knowledge
-> a
NOTE: application area knowledge encompass b, c, and d
(12) A new pm is having difficulty create a wbs with the team. To alleviate this situation, the PM should ask for help from:
PMO
(13) The project is not going well. there are over 30 stakeholders, and no one can agree on the project objectives. one stakeholder believe the project can achieve a 30% improvement while another believes a 50% improvement is possible. The PM thinks a 10% is more realistic. What is the best course of action?
-> perform a feasibility analysis
(14) Project A has a IRR of 12%. Project B has a benefit-cost-ratio of 1.3. which project would you select?
-> project A
Beneft cost ration of 2.1 means: the payback is 2.1 times the cost
NOTE: IRR of 12% clearly demonstrates the return on investment (ROI). However, benefit-cost-ratio is about revenue / cost. It is impossible to determine if it is better than IRR of 12%.
(15) A PMO can be established to offer services ranging from basic support to total management of all projects.
(16) Project A has a NPV of 70K being done over 6 years. Project B has a NPV of 60K being done over 1 year. Which project would you choose
-> A
NOTE: you simply choose highest NPV since number of years is already taken in consideration
(17) A CEO of a large publishing company desires to improve project management practices. what is the best thing to do?
-> retain the functional organization structure (this is a ongoing and repeatable business process)
(18) A person is writing a document identifying the business need for a project and is including a description of the product created by the project. She includes a list of stakeholders and preassigned resources. What is the role of this person?
-> sponsor or project manager
NOTE: the project charter is issued by the sponsor. The PM may have a role in its creation
(19) What is the role of stakeholders in a project?
--> They help to determine the project constraints and product deliverables.
(20) The project team is working on manufacturing a product, but they are having difficulty creating a project charter. What is the problem?
--> They are working on a process, not a project
(20) A PM has just been assigned to a project and has been given the approved project charter. The first thing the PM must do is:
--> confirm that all the stakeholders have had input to the scope
(21) The stakeholders do not have a role in determining project management plan unless thy are part of the project team
(22) The main focuses of managing a project include: idenfying requirements, establish clear and achievable objectives and balancing competing demands for scope, time, cost etc
(23) You are managing a project that is a joint project between your company and another company. The contract is not finalized, and there has been a great deal of arguing. The project scope has been expanding, cost has been increasing, and the schedule has been lengthening. You hear that the project might be canceled because the other organization withdrew its share of the funding. what is most likely reason that this occurred?
(a) inadequate scope management
(b) lack of sponsor commitment (x)
It is the role of the sponsor to define the initial project and protect it from changes
Thursday, February 25, 2010
PMP Question Series: Miscellaneous Topic
(1) The most common inputs of PM processes:
Organizational process asset: Existing process/procedure/historical information
Enterprise Environment factor: Existing system / company culture
(2) Most common Tools and techniques
Expert judgment
(3) most common outputs
project management plan update
project document update
The examples of project documents:
project charter, SOW (statement of work)
requirement document
activity list
stakeholder register
risk register
quality metrics
issue log
change log
Some terminologies (French)
Fait accompli --> done deal, can not be changed (provurement management)
Force majeure --> an allowable execuse such as fire or storm causing either party not meeting contract requirements. It is considered as neither party's fault (procurement management)
Laissez-faire --> "allow to act"/"leave alone" is a leadership / management style. A laissez-faire manager is effective in working with a highly skilled team (human resource management)
PERT analysis --> program evaluation & review technique. An example is three-point estimate.
PERT network --> basically the critical path network diagram
GANTT chart --> the bar chart for progress reporting and control
Milestone chart --> only show major events
RACI chart: responsibility, accountability, consult, inform
Organizational process asset: Existing process/procedure/historical information
Enterprise Environment factor: Existing system / company culture
(2) Most common Tools and techniques
Expert judgment
(3) most common outputs
project management plan update
project document update
The examples of project documents:
project charter, SOW (statement of work)
requirement document
activity list
stakeholder register
risk register
quality metrics
issue log
change log
Some terminologies (French)
Fait accompli --> done deal, can not be changed (provurement management)
Force majeure --> an allowable execuse such as fire or storm causing either party not meeting contract requirements. It is considered as neither party's fault (procurement management)
Laissez-faire --> "allow to act"/"leave alone" is a leadership / management style. A laissez-faire manager is effective in working with a highly skilled team (human resource management)
PERT analysis --> program evaluation & review technique. An example is three-point estimate.
PERT network --> basically the critical path network diagram
GANTT chart --> the bar chart for progress reporting and control
Milestone chart --> only show major events
RACI chart: responsibility, accountability, consult, inform
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