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Which one of the following represents an ALE calculation?
Correct Answer: A
Explanation/Reference: Explanation: The Annualized Loss Expectancy (ALE) is the monetary loss that can be expected for an asset due to a risk over a one year period. It is defined as: ALE = SLE * ARO where SLE is the Single Loss Expectancy and ARO is the Annualized Rate of Occurrence. Single loss expectancy is one instance of an expected loss if a specific vulnerability is exploited and how it affects a single asset. Asset Value × Exposure Factor = SLE. The annualized rate of occurrence (ARO) is the value that represents the estimated frequency of a specific threat taking place within a 12-month timeframe. Incorrect Answers: B: Gross loss expectancy and loss frequency are not terms used for calculations in Quantitative Risk Analysis. C: Actual replacement cost and proceeds of salvage are not terms used for calculations in Quantitative Risk Analysis. D: Asset value x loss expectancy is not the correct formula to calculate the Annualized Loss Expectancy (ALE). References: Harris, Shon, All In One CISSP Exam Guide, 6th Edition, McGraw-Hill, New York, 2013, p. 87