Section: Risk, Response and Recovery
Explanation/Reference:
Three steps are undertaken in a quantitative risk assessment:
Initial management approval
Construction of a risk assessment team, and
The review of information currently available within the organization.
There are a few formulas that you MUST understand for the exam. See them below:
SLE (Single Loss Expectancy)
Single loss expectancy (SLE) must be calculated to provide an estimate of loss. SLE is defined as the difference between the original value and the remaining value of an asset after a single exploit.
The formula for calculating SLE is as follows: SLE = asset value (in $) × exposure factor (loss due to successful threat exploit, as a %) Losses can include lack of availability of data assets due to data loss, theft, alteration, or denial of service (perhaps due to business continuity or security issues).
ALE (Annualized Loss Expectancy)
Next, the organization would calculate the annualized rate of occurrence (ARO).
This is done to provide an accurate calculation of annualized loss expectancy (ALE).
ARO is an estimate of how often a threat will be successful in exploiting a vulnerability over the period of a year.
When this is completed, the organization calculates the annualized loss expectancy (ALE).
The ALE is a product of the yearly estimate for the exploit (ARO) and the loss in value of an asset after an SLE.
The calculation follows ALE = SLE x ARO
Note that this calculation can be adjusted for geographical distances using the local annual frequency estimate (LAFE) or the standard annual frequency estimate (SAFE). Given that there is now a value for SLE, it is possible to determine what the organization should spend, if anything, to apply a countermeasure for the risk in question.
Remember that no countermeasure should be greater in cost than the risk it mitigates, transfers, or avoids.
Countermeasure cost per year is easy and straightforward to calculate. It is simply the cost of the countermeasure divided by the years of its life (i.e., use within the organization). Finally, the organization is able to compare the cost of the risk versus the cost of the countermeasure and make some objective decisions regarding its countermeasure selection.
The following were incorrect answers:
All of the other choices were incorrect.
The following reference(s) were used for this quesiton:
Hernandez CISSP, Steven (2012-12-21). Official (ISC)2 Guide to the CISSP CBK, Third Edition ((ISC)2 Press) (Kindle Locations 10048-10069). Auerbach Publications. Kindle Edition.

Explanation/Reference:
Because the Reference Monitor is responsible for access control to the objects by the subjects it compares the security labels of a subject and an object.
According to the OIG: The reference monitor is an access control concept referring to an abstract machine that mediates all accesses to objects by subjects based on information in an access control database. The reference monitor must mediate all access, be protected from modification, be verifiable as correct, and must always be invoked. The reference monitor, in accordance with the security policy, controls the checks that are made in the access control database.
The following are incorrect:
Validation Module. A Validation Module is typically found in application source code and is used to validate data being inputted.
Clearance Check. Is a distractor, there is no such thing other than what someone would do when checking if someone is authorized to access a secure facility.
Security Module. Is typically a general purpose module that prerforms a variety of security related functions.
References:
OIG CBK, Security Architecture and Design (page 324)
AIO, 4th Edition, Security Architecture and Design, pp 328-328.
Wikipedia - http://en.wikipedia.org/wiki/Reference_monitor

SearchStorage.com Definitions mentions "As part of a disaster recovery plan, BIA is likely to identify costs linked to failures, such as loss of cash flow, replacement of equipment, salaries paid to catch up with a backlog of work, loss of profits, and so on.
A BIA report quantifies the importance of business components and suggests appropriate fund allocation for measures to protect them. The possibilities of failures are likely to be assessed in terms of their impacts on safety, finances, marketing, legal compliance, and quality assurance.
Where possible, impact is expressed monetarily for purposes of comparison. For example, a business may spend three times as much on marketing in the wake of a disaster to rebuild customer confidence."
Source: KRUTZ, Ronald L. & VINES, Russel D., The CISSP Prep Guide: Mastering the Ten Domains of Computer Security, John Wiley & Sons, 2001, Page 278.

The primary objective of proper separation of duties is to ensure that one person acting alone cannot compromise the company's security in any way. A proper separation of duties does not prevent employees from disclosing information, nor does it ensure that access controls are in place or that audit trails are not tampered with. Source: HARRIS, Shon, All-In-One CISSP Certification Exam Guide, McGraw-Hill/Osborne, 2002, Chapter 12: Operations Security (Page 808).

Explanation/Reference:
The proxy (application layer firewall, circuit level proxy, or application proxy ) is a second generation firewall
"First generation firewall" incorrect. A packet filtering firewall is a first generation firewall.
"Third generation firewall" is incorrect. Stateful Firewall are considered third generation firewalls
"Fourth generation firewall" is incorrect. Dynamic packet filtering firewalls are fourth generation firewalls References:
CBK, p. 464
AIO3, pp. 482 - 484
Neither CBK or AIO3 use the generation terminology for firewall types but you will encounter it frequently as a practicing security professional. See http://www.cisco.com/univercd/cc/td/doc/product/iaabu/centri4/ user/scf4ch3.htm for a general discussion of the different generations.