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ADA Prerequisites

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Self-Assessment  Quiz

The following link is to an Acrobat (pdf) file with 10 questions about decision analysis.  Persons who have recently attended Petroleum Risks and Decision Analysis (PRD) should be able to answer most questions easily.

Link to the printer-friendly pdf file:  adaprequiz_10q.pdf

Or, if you prefer, the questions are listed below.

If you are unsure about your answers or simply wish to check them, e-mail your answers and you will receive back an answer key.  You get a bonus for submitting your answers (data we can use).  We will also send you another 11 practice questions, with answers.   Use a friend's e-mail account if you wish to remain anonymous.

For solutions plus 11 bonus questions, send your answers to:


Multiple Choice. Select the letter that best answers the question.

1)      For a positively-skewed distribution, what is the proper sequence?
      a)      mean < median < mode
      b)      mode < P50 < median
      c)      mode < median < mean
      d)      mean < mode < median
2)      The Microsoft Excel program uses what discounting assumption in its NPV function?:
   a)      Continuous cashflows
   b)      Cashflows at period starts
   c)      Cashflows at period ends
   d)      Cashflows at midperiods
3)      In constructing decision trees, it is permissible to place costs along branches and use these in back-solving the tree.  This works because:
   a)      The delta property of expected value
   b)      The distributive property of means
   c)      All costs are included in the terminal node values
   d)      The stochastic dominance principle.
4)      The risk tolerance coefficient used in an exponential utility function for risk policy represents:
   a)      A scaling factor for risk aversion
   b)      The maximum amount the company would risk on any one project
   c)      The company’s net worth
   d)      The maximum amount the company is willing to pay to avoid risk.
5)      Latin hypercube sampling is used for:
   a)      Collecting data samples, as in field studies
   b)      Reducing the time to convergence in Monte Carlo simulation
   c)      Method of correlating dependent chance events
   d)      Method of correlating independent chance events
6)      The chronology of nodes in a decision tree should follow:
   a)      Decision nodes first, then chance events
   b)      The historical sequence of nature
   c)      The sequence of the project
   d)      Independent chance events first.
7)      P(A B) 0 means
   a)      A and B are independent
   b)      A and B are not mutually exclusive
   c)      A and B are dependent
   d)      None of the above.
8)      Which representation shows the importance of input variables contributing to outcome uncertainty?
   a)      Tornado chart
   b)      Influence diagram
   c)      Scatter diagram of input variables
   d)      Joint probability table.
9)      Which is used to revise probabilities based upon imperfect information?
   a)      Influence diagram
   b)      Addition theorem
   c)      Stochastic inversion
   d)      Bayes’ rule.
10)   Which is the most popular measure of uncertainty?
   a)      Correlation coefficient
   b)      Variance
   c)      Standard deviation
   d)      Median.

 <End of quiz>

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