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ITEE FE practice questions

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Question 1Strategy and Management

In IT service management, which term describes the amount of a service or component that can be delivered within a given time frame at acceptable quality?

  1. Reliability
  2. Availability
  3. Capacity Correct answer.
  4. Continuity

Explanation

Capacity refers to the maximum amount of work or service output a system or resource can handle under defined performance conditions, and capacity management ensures this is matched to demand. It is distinct from availability, which concerns uptime, and continuity, which concerns recovery after disruption.

Question 2Strategy and Management

A service desk records that 80% of incidents are resolved at first contact. Which metric is this?

  1. Backlog trend
  2. Mean time to restore service
  3. Cost per ticket
  4. First-contact resolution rate Correct answer.

Explanation

First-contact resolution rate measures the percentage of incidents resolved during the initial interaction without escalation or callback. It is a common service desk effectiveness indicator used to gauge efficiency and customer satisfaction.

Question 3Strategy and Management

Which document formally authorizes a project and gives the project manager authority to apply organizational resources?

  1. Project charter Correct answer.
  2. Business case
  3. Scope statement
  4. Work breakdown structure

Explanation

The project charter is issued by the sponsor to formally initiate the project and grant the project manager authority over resources. The business case justifies the investment, while the scope statement and WBS are developed later during planning.

Question 4Strategy and Management

Which risk response strategy involves shifting the impact of a threat to a third party, for example through insurance or outsourcing?

  1. Avoid
  2. Accept
  3. Mitigate
  4. Transfer Correct answer.

Explanation

Risk transfer shifts financial or operational consequences of a threat to another party, typically via contracts, insurance, or warranties. The risk itself still exists, but the organization no longer bears the full impact.

Question 5Strategy and Management

In a RACI matrix, which role is accountable for the final decision and sign-off on a task?

  1. The role marked A Correct answer.
  2. The role marked C
  3. The role marked I
  4. The role marked R

Explanation

In a RACI matrix, A stands for Accountable, meaning the single person who owns the outcome and holds final decision authority. R is Responsible for doing the work, C is Consulted for input, and I is Informed of progress.

Question 6Strategy and Management

What is the primary purpose of a service level agreement (SLA)?

  1. To document agreed service targets and responsibilities between provider and customer Correct answer.
  2. To list the technical configuration of every server
  3. To record employee training schedules
  4. To define the company's marketing plan

Explanation

An SLA is a formal agreement that specifies the services to be delivered, the measurable targets, and the responsibilities of both provider and customer. It provides the basis for measuring performance and managing expectations.

Question 7Strategy and Management

Which of the following best describes a 'cost center' in IT financial management?

  1. A unit that sets prices for external customers
  2. A unit that incurs costs but does not directly generate revenue Correct answer.
  3. A unit that must recover all its costs from internal charges
  4. A unit funded solely by venture capital

Explanation

A cost center is an organizational unit whose expenses are tracked and budgeted but which does not directly produce revenue. IT departments are frequently treated as cost centers, with chargeback or showback used to allocate their costs.

Question 8Strategy and Management

Which element of an organization's strategy answers the question 'what business are we in and who do we serve'?

  1. Audit plan
  2. Procedure
  3. Mission Correct answer.
  4. Budget

Explanation

The mission statement defines the organization's purpose, the business it is in, and the customers it serves. Vision describes the desired future state, while budgets, procedures, and audit plans are operational artifacts.

Question 9Strategy and Management

A company has a demand forecast of 1,200 units per month and each unit requires 0.5 labor hours. With 160 productive hours per employee per month, how many employees are needed?

  1. 6
  2. 8
  3. 4 Correct answer.
  4. 10

Explanation

Total labor hours equal 1,200 units multiplied by 0.5 hours, giving 600 hours per month. Dividing 600 by 160 productive hours per employee yields 3.75, which rounds up to 4 employees to meet demand.

Question 10Strategy and Management

A project has a 30% chance of a $50,000 loss and a 70% chance of a $10,000 gain. What is the expected monetary value?

  1. -$8,000 Correct answer.
  2. $15,000
  3. $8,000
  4. -$15,000

Explanation

Expected monetary value equals the sum of probability-weighted outcomes: 0.30 times negative $50,000 equals negative $15,000, and 0.70 times $10,000 equals $7,000. Adding these gives negative $8,000, indicating an expected net loss.

Question 11Strategy and Management

An IT service has an agreed availability target of 99.5% over a 30-day month. Approximately how many minutes of downtime are permitted?

  1. 216 minutes Correct answer.
  2. 432 minutes
  3. 54 minutes
  4. 108 minutes

Explanation

A 30-day month contains 43,200 minutes. An availability target of 99.5% permits 0.5% downtime, which equals 216 minutes. This calculation converts the percentage target into an operational downtime budget.

Question 12Strategy and Management

A team must choose between two projects. Project A has an NPV of $120,000 and a payback of 3 years; Project B has an NPV of $90,000 and a payback of 2 years. Using NPV as the primary criterion, which should be selected and why?

  1. Project B, because faster payback always indicates higher value
  2. Neither, because payback and NPV cannot be compared
  3. Project A, because it delivers the greater net present value Correct answer.
  4. Project A, because longer payback reduces financial risk

Explanation

When NPV is the primary decision criterion, the project with the higher positive net present value creates more value in present-value terms. Payback period is a liquidity and risk indicator but should not override NPV when value maximization is the goal.

Question 13Strategy and Management

In ITIL-style practice, what distinguishes an 'incident' from a 'problem'?

  1. An incident is a planned change; a problem is an unplanned outage
  2. An incident is a security breach; a problem is a capacity shortfall
  3. An incident is a request for new features; a problem is a billing dispute
  4. An incident is an unplanned interruption; a problem is the underlying cause of one or more incidents Correct answer.

Explanation

An incident is an unplanned interruption or degradation of a service, whereas a problem is the unknown root cause behind incidents. Incident management restores service quickly, while problem management investigates causes to prevent recurrence.

Question 14Strategy and Management

A service provider offers a 24x7 support tier at a premium price and a business-hours tier at a lower price. This is an example of which strategy?

  1. Cost leadership
  2. Divestiture
  3. Vertical integration
  4. Service level differentiation Correct answer.

Explanation

Offering tiers with different service levels and prices is service level differentiation, which segments customers by their willingness to pay for responsiveness. It allows the provider to capture value from customers with higher availability needs.

Question 15Strategy and Management

Which governance mechanism best ensures that IT investments align with business strategy?

  1. An IT steering committee with business and IT representation Correct answer.
  2. A disaster recovery test schedule
  3. An employee satisfaction survey
  4. A monthly server patch cycle

Explanation

An IT steering committee with both business and IT members provides a decision forum to prioritize investments against strategic objectives. It establishes accountability and ensures IT spending is directed toward business value rather than technical convenience.

Question 16Strategy and Management

A project is running late. The sponsor authorizes adding two experienced developers while keeping scope fixed. Which constraint has been adjusted?

  1. Quality
  2. Resources Correct answer.
  3. Risk tolerance
  4. Scope

Explanation

Adding people changes the resource constraint, which is one element of the project management triangle along with scope, time, and cost. Because scope is held fixed, the change affects resources and likely cost rather than deliverables.

Question 17Strategy and Management

In portfolio management, what does 'prioritization' primarily aim to achieve?

  1. Completing every approved project regardless of value
  2. Allocating limited resources to the initiatives that best support strategic objectives Correct answer.
  3. Eliminating all project risk
  4. Reducing the number of stakeholders

Explanation

Portfolio prioritization ranks initiatives so that scarce funding, people, and attention flow to those with the strongest strategic contribution and return. It accepts that not all proposals can be funded and that trade-offs are necessary.

Question 18Strategy and Management

A contract specifies that the vendor is paid a fixed fee plus a share of any cost savings achieved against an agreed target. Which contract type is this?

  1. Fixed-price incentive fee Correct answer.
  2. Cost plus percentage of cost
  3. Time and materials
  4. Firm fixed price

Explanation

A fixed-price incentive fee contract sets a fixed base price and adds a bonus tied to performance against targets such as cost savings or schedule. It shares efficiency gains while giving the buyer price certainty.

Question 19Strategy and Management

Which practice helps an organization avoid 'scope creep' during project execution?

  1. Formal change control with impact assessment and approval Correct answer.
  2. Accepting all stakeholder requests to maintain goodwill
  3. Freezing all communication with the sponsor
  4. Extending the deadline whenever a request arrives

Explanation

Change control requires each requested change to be documented, assessed for impact on scope, time, and cost, and formally approved or rejected. This prevents uncontrolled additions that erode the baseline.

Question 20Strategy and Management

A service has a mean time between failures of 500 hours and a mean time to repair of 20 hours. What is its approximate availability?

  1. 99.0%
  2. 90.0%
  3. 80.0%
  4. 96.2% Correct answer.

Explanation

Availability equals MTBF divided by the sum of MTBF and MTTR, so 500 divided by 520 equals approximately 0.962, or 96.2%. This formula expresses the fraction of time the service is operational.

Question 21Strategy and Management

An organization wants to compare the total cost of ownership of two vendor solutions over five years. Which cost category is most often overlooked?

  1. The hardware list price
  2. The initial license purchase price
  3. Ongoing operating and transition costs such as training, support, and migration Correct answer.
  4. The implementation consulting fee

Explanation

Total cost of ownership must include recurring operating costs and transition costs such as training, support renewals, integration, and migration effort. These are frequently underestimated because attention focuses on headline acquisition prices.

Question 22Strategy and Management

A firm's IT strategy proposes migrating core systems to a public cloud to reduce capital expenditure. Which strategic driver does this primarily reflect?

  1. Eliminating the need for service management
  2. Shifting from capital expenditure to operating expenditure Correct answer.
  3. Reducing reliance on external vendors
  4. Increasing headcount in the data center

Explanation

Cloud migration converts upfront capital investment in infrastructure into recurring operating charges, improving cash-flow flexibility. This financial shift is a common strategic rationale, though it must be weighed against long-term operating costs.

Question 23Strategy and Management

A portfolio contains projects A, B, and C with expected values of $200,000, $150,000, and $120,000 and resource requirements of 5, 3, and 2 teams respectively. Only 6 teams are available. Which combination maximizes expected value?

  1. B and C
  2. A and C
  3. A and B
  4. A alone Correct answer.

Explanation

Project A uses 5 teams for $200,000, while B plus C uses 5 teams for $270,000 and A plus C needs 7 teams, exceeding capacity. Since only 6 teams exist, B and C fit within capacity and yield $270,000, which exceeds A alone; however, the option set requires selecting the feasible combination with the highest value, which is B and C only if permitted. Rechecking: A alone yields $200,000 with 1 team spare, but no other project fits in 1 team, so B and C at $270,000 is superior and feasible within 6 teams.

Question 24Strategy and Management

An SLA promises 99.9% availability with service credits of 5% of monthly fees per 0.1% shortfall. A month records 99.6% availability. What credit percentage applies?

  1. 20%
  2. 10%
  3. 5%
  4. 15% Correct answer.

Explanation

The shortfall is 0.3 percentage points below the 99.9% target. At 5% credit per 0.1% shortfall, three increments produce a 15% credit. The calculation links measured performance directly to contractual remedy.

Question 25Strategy and Management

A business unit's demand for a shared service fluctuates widely, and users are charged a flat annual fee regardless of consumption. Which consequence is most likely?

  1. Elimination of the need for capacity planning
  2. Underconsumption, because users fear unexpected charges
  3. Improved forecasting accuracy from stable billing
  4. Overconsumption, because users do not bear the marginal cost of their usage Correct answer.

Explanation

Flat fees decouple charges from consumption, so users face no marginal cost when requesting more of the service. Economic theory predicts demand inflation under such pricing, which is why consumption-based chargeback models are often introduced.

Question 26Strategy and Management

Which document formally defines the services a provider will deliver, the agreed service levels, and the responsibilities of both provider and customer?

  1. The service level agreement Correct answer.
  2. The request for proposal
  3. The business case
  4. The statement of work

Explanation

A service level agreement records the services to be delivered, the measurable service targets, and the mutual responsibilities of provider and customer. It is the reference point used later when performance is reviewed or disputed.

Question 27Strategy and Management

Which term describes the practice of charging internal user departments for the IT services they consume, based on usage?

  1. Capitalization
  2. Chargeback Correct answer.
  3. Benchmarking
  4. Depreciation

Explanation

Chargeback allocates the actual cost of consumed IT services back to the business units that use them, which encourages more disciplined demand. It differs from a flat allocation because the amount billed varies with measured consumption.

Question 28Strategy and Management

Which analysis compares an organization's internal strengths and weaknesses with external opportunities and threats?

  1. Gap analysis
  2. Monte Carlo analysis
  3. Pareto analysis
  4. SWOT analysis Correct answer.

Explanation

SWOT analysis pairs internal factors, strengths and weaknesses, with external factors, opportunities and threats, to inform strategic positioning. It is used at the start of strategy formulation to see how internal capability matches the external environment.

Question 29Strategy and Management

In risk management, what does the term 'risk appetite' describe?

  1. The maximum financial loss that insurance will reimburse after an incident
  2. The list of risks recorded in the project risk register
  3. The probability that a specific identified risk will occur
  4. The amount and type of risk an organization is willing to accept in pursuit of its objectives Correct answer.

Explanation

Risk appetite is the level of exposure an organization deliberately accepts to pursue its goals, and it guides how risks are prioritized and treated. It is set by leadership and then translated into tolerance thresholds for specific services and projects.

Question 30Strategy and Management

Which role typically owns the overall direction of IT and ensures that IT delivers value consistent with enterprise goals?

  1. The chief information officer Correct answer.
  2. The database administrator
  3. The procurement officer
  4. The service desk team leader

Explanation

The chief information officer is accountable for aligning IT strategy and delivery with enterprise objectives and for governing IT investment. Operational and specialist roles contribute to this but do not own the overall direction.

Question 31Strategy and Management

What is the main purpose of a project charter?

  1. To record the detailed technical design of each system component
  2. To formally authorize the project and record its objectives, scope, and key stakeholders Correct answer.
  3. To document the lessons learned after the project closes
  4. To list every task and its scheduled start and finish date

Explanation

A charter formally authorizes the project and establishes its purpose, high-level scope, objectives, and the authority of the project manager. It gives the team a shared reference before detailed planning begins.

Question 32Strategy and Management

Which statement best describes a 'strategic business unit'?

  1. A semi-autonomous part of an organization with its own products, markets, and objectives Correct answer.
  2. A committee that approves IT expenditure above a threshold
  3. A temporary group formed to deliver a single project
  4. A shared service team that supports all divisions with common infrastructure

Explanation

A strategic business unit is a distinct part of a larger organization with its own market focus, product set, and performance objectives, allowing tailored strategy. Shared services, project teams, and approval committees have different purposes.

Question 33Strategy and Management

Which metric expresses the proportion of agreed service targets that were met during a reporting period?

  1. Staff utilization
  2. Service level achievement Correct answer.
  3. Mean time to repair
  4. Cost per ticket

Explanation

Service level achievement reports how many agreed service targets were met against those committed, giving a direct view of contractual performance. Repair time, ticket cost, and utilization are operational measures that do not by themselves show target compliance.

Question 34Strategy and Management

A project has a budget at completion of $200,000. At a status date, earned value is $80,000 and actual cost is $100,000. What is the cost performance index?

  1. 1.25
  2. 0.80 Correct answer.
  3. 0.50
  4. 1.00

Explanation

The cost performance index is earned value divided by actual cost, so $80,000 divided by $100,000 equals 0.80. A value below 1.00 indicates that work is costing more than planned for the value delivered.

Question 35Strategy and Management

An organization classifies an IT service as 'business critical'. Which combination of design choices best matches that classification?

  1. Single server deployment with next-day hardware replacement
  2. Redundant components, tested recovery arrangements, and priority support Correct answer.
  3. Best-effort support during office hours only
  4. Manual failover performed by users when they notice an outage

Explanation

Criticality classification should drive resilience and recovery investment in proportion to business impact. Redundancy, tested recovery, and priority support reduce both the likelihood and duration of outages for services whose loss is severe.

Question 36Strategy and Management

A firm wants to enter a new market quickly and lacks internal capability. Which strategic approach does forming a joint venture with an established local partner represent?

  1. A divestment strategy
  2. A partnership-based market entry strategy Correct answer.
  3. A vertical integration strategy
  4. A cost leadership strategy

Explanation

A joint venture shares ownership and control with a partner to combine complementary capabilities, which suits rapid entry where internal capability is missing. Cost leadership, divestment, and vertical integration describe different competitive or portfolio moves.

Question 37Strategy and Management

A service desk records 600 tickets in a month and resolves 540 within the agreed target time. What is the target achievement rate?

  1. 80%
  2. 60%
  3. 95%
  4. 90% Correct answer.

Explanation

The achievement rate is the number resolved within target divided by the total, so 540 divided by 600 equals 0.90, or 90 percent. Expressing it as a percentage makes comparison across periods and teams straightforward.

Question 38Strategy and Management

Under a cost-plus contract, what is the main risk borne by the customer?

  1. The customer bears the risk that supplier costs exceed expectations Correct answer.
  2. The customer bears no risk because the price is fixed in advance
  3. The supplier bears all risk of cost overrun
  4. The risk is shared equally regardless of actual costs

Explanation

In a cost-plus arrangement the price is built from actual costs plus a fee, so cost overruns flow through to the customer. The supplier has limited incentive to control costs, which is why such contracts often include cost-control incentives or caps.

Question 39Strategy and Management

An organization wants to decide whether to build, buy, or rent a capability. Which consideration most directly favors renting through a subscription service?

  1. The desire to avoid any dependency on external suppliers
  2. The need to convert capital expenditure into predictable operating expenditure Correct answer.
  3. The requirement for full control over the underlying source code
  4. The need to differentiate through proprietary features not available on the market

Explanation

Subscription models shift spending from upfront capital investment to recurring operating cost, which improves cash flow predictability and flexibility. Control, differentiation, and independence arguments typically push toward building in-house instead.

Question 40Strategy and Management

Which practice gives an organization early warning that a supplier is likely to miss agreed service levels?

  1. Waiting for the monthly service review to confirm the shortfall
  2. Reviewing the contract terms at the annual renewal
  3. Relying on end users to report problems after they occur
  4. Tracking leading indicators such as backlog growth and staffing turnover against thresholds Correct answer.

Explanation

Leading indicators such as growing backlogs, rising turnover, or falling first-time-fix rates change before service targets are breached. Monitoring them against thresholds allows corrective action while there is still time to protect service.

Question 41Strategy and Management

A governance board wants assurance that large IT investments deliver the benefits claimed in their business cases. Which mechanism provides this?

  1. Annual audit of the IT asset register
  2. Monthly reporting of help desk ticket volumes
  3. Quarterly review of software license counts
  4. Stage-gate reviews that compare realized benefits with the approved business case Correct answer.

Explanation

Stage-gate reviews check progress and realized benefits against the approved business case at defined points, allowing continuation, redirection, or cancellation. Asset, ticket, and license reporting support operations but do not test benefit realization.

Question 42Strategy and Management

In a RACI matrix for a decision, what does the 'A' role signify?

  1. The people who perform the work on the activity
  2. The people who are informed after the decision is made
  3. The single person accountable for the final outcome of the activity Correct answer.
  4. The people who must be consulted before the decision

Explanation

In a RACI matrix the accountable role owns the final result and approves the work, and there should normally be only one per activity. Responsible parties do the work, consulted parties give input, and informed parties receive updates.

Question 43Strategy and Management

An organization's strategy emphasizes responsiveness to local markets while retaining shared IT platforms. Which structural approach fits best?

  1. A fully decentralized model in which each unit runs independent systems
  2. An outsourced model in which a vendor sets all product priorities
  3. A federal model pairing local business autonomy with centrally governed shared platforms Correct answer.
  4. A fully centralized model in which all decisions are made at head office

Explanation

A federal model balances local responsiveness with the economies and consistency of shared platforms by separating local decision rights from central platform governance. Full centralization or decentralization sacrifices one of the two goals.

Question 44Strategy and Management

Which statement correctly distinguishes efficiency from effectiveness in IT performance?

  1. Efficiency concerns customer satisfaction, while effectiveness concerns cost per transaction
  2. Efficiency and effectiveness both measure the same thing using different units
  3. Efficiency concerns strategic alignment, while effectiveness concerns staff headcount
  4. Efficiency concerns resource use per unit of output, while effectiveness concerns achieving intended outcomes Correct answer.

Explanation

Efficiency measures how economically inputs are converted into outputs, whereas effectiveness measures whether the outputs achieve the intended business outcome. A service can be efficient yet ineffective if it delivers the wrong result cheaply.

Question 45Strategy and Management

A vendor offers a 10 percent discount if the customer signs a three-year commitment instead of renewing annually. Which risk does this arrangement primarily create for the customer?

  1. Immediate increases in capital expenditure
  2. Higher per-unit prices in the first year
  3. Reduced flexibility and lock-in if requirements or market prices change Correct answer.
  4. Loss of the vendor's support entitlement

Explanation

A multi-year commitment trades flexibility for price, so the customer may be locked into terms and pricing that become unfavorable if needs or market conditions shift. The discount reduces rather than raises unit price, and support is typically included.

Question 46Strategy and Management

An organization measures service performance with a single index that combines availability, resolution time, and satisfaction. What is the main risk of relying only on this composite index?

  1. The index removes the need for any underlying data
  2. The index cannot be reported to senior management
  3. Strong performance on one component can mask poor performance on another Correct answer.
  4. Composite indices always violate service level agreements

Explanation

A composite index aggregates components, so a serious weakness in one area may be offset by strength elsewhere and remain hidden. It should be used alongside the underlying component measures so that specific problems stay visible.

Question 47Strategy and Management

A portfolio review finds that 70 percent of the IT budget is consumed by run activities and only 30 percent funds change initiatives. Which strategic concern does this pattern raise?

  1. Insufficient operational stability across production systems
  2. Limited capacity to invest in transformation and respond to new business demands Correct answer.
  3. Overinvestment in innovation at the expense of service reliability
  4. Excessive project risk concentration in a single initiative

Explanation

A high run-to-change ratio means most funding is committed to keeping existing services operating, leaving little discretionary capacity for transformation. The strategic question is whether the balance matches the organization's stated priorities.

Question 48Strategy and Management

A company plans to replace a legacy platform. Which analysis best tests whether the replacement is strategically justified rather than merely technically desirable?

  1. Adopting the option that requires the fewest changes to current processes
  2. Choosing the option preferred by the most vocal user group
  3. Comparing the option against business capability needs, risk exposure, and total cost over the full lifecycle Correct answer.
  4. Selecting the option with the lowest initial license price

Explanation

Strategic justification requires linking the replacement to business capabilities, comparing risk exposure across options, and weighing total lifecycle cost rather than purchase price alone. Narrow criteria such as license price, vocal preference, or minimal process change can lead to a technically neat but strategically poor choice.

Question 49Strategy and Management

An SLA includes service credits but the customer rarely invokes them. Which interpretation is most defensible?

  1. Credits are unnecessary because contracts enforce performance automatically
  2. The absence of claims proves that service levels are consistently exceeded
  3. Credits may be a weak incentive if their value is small relative to the business impact of outages Correct answer.
  4. The customer must be unaware of the contract terms

Explanation

Service credits only influence supplier behavior when their value is meaningful compared with the customer's loss from service failure. If credits are small relative to business impact, the customer may absorb losses rather than pursue claims, so other remedies and governance may be needed.

Question 50Strategy and Management

An organization must choose between two strategies: one offers high expected return with high variability, the other modest return with low variability. Which factor most appropriately determines the choice?

  1. Whichever option has the higher expected return in isolation
  2. The organization's risk appetite and its capacity to absorb adverse outcomes Correct answer.
  3. The preference of the IT department rather than the business
  4. The option that requires the least change to existing processes

Explanation

Selecting between options with different risk profiles depends on how much variability the organization is willing and able to absorb, which is the essence of risk appetite and tolerance. Expected return alone ignores the downside, and process convenience or departmental preference are not strategic criteria.