CTO CTO Budget & Financial Management

Question 1

Which budgeting approach allocates resources based on strategic priority rather than prior-year spend?

Accepted Answer

Zero-based budgeting

Answer

Incremental budgeting

Answer

Activity-based budgeting

Answer

Rolling budget

Question 2

A CTO presents a business case for a $5M platform modernization. Which metric best demonstrates financial value to the CFO?

Accepted Answer

Net Present Value (NPV)

Answer

Lines of code replaced

Answer

Number of microservices created

Answer

Sprint velocity improvement

Question 3

What is the primary purpose of a technology chargeback model?

Accepted Answer

Allocate IT costs transparently to business units

Answer

Penalize departments for overuse

Answer

Reduce the overall IT budget

Answer

Track vendor invoice dates

Question 4

Which of the following best describes Total Cost of Ownership (TCO) for a software system?

Accepted Answer

All costs over the system's useful life including maintenance and support

Answer

Initial licensing fee only

Answer

Hardware acquisition cost

Answer

Annual SaaS subscription fee

Question 5

A CTO must reduce the IT OpEx budget by 15% without impacting critical services. What is the FIRST recommended action?

Accepted Answer

Conduct a portfolio rationalization to identify redundant tools and licenses

Answer

Freeze all hiring

Answer

Renegotiate all vendor contracts simultaneously

Answer

Migrate all workloads to the cloud immediately

Question 6

Which financial concept helps a CTO justify IT investments by expressing returns as a percentage of the investment cost?

Accepted Answer

Return on Investment (ROI)

Answer

EBITDA

Answer

Gross Margin

Answer

Payback Period