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NEW QUESTION: 1
-- Exhibit- -- Exhibit -


A. Option B
B. Option D
C. Option A
D. Option C
Answer: C

NEW QUESTION: 2
Which two modes are supported during the Phase 1 IKE negotiations used to establish an IPsec tunnel? (Choose two.)
A. aggressive mode
B. main mode
C. transport mode
D. tunnel mode
Answer: A,B

NEW QUESTION: 3
Amie Lear, CFA, is a quantitative analyst employed by a brokerage firm. She has been assigned by her supervisor to cover a number of different equity and debt investments. One of the investments is Taylor, Inc. (Taylor), a manufacturer of a wide range of children's toys. Based on her extensive analysis, she determines that her expected return on the stock, given Taylor's risks, is 10%. In applying the capital asset pricing model (CAPM), the result is a 12% rate of return.
For her analysis of the returns of Devon, Inc. (Devon), a manufacturer of high-end sports apparel, Lear intends to use the Fama-French model (FFM). Devon is a small-cap growth stock that has traded at a low market-to-book value in recent years. Lear's analysis has provided a wealth of quantitative information to consider. The return on a value-weighted market index minus the risk-free rate is 5.5%, the small-cap return premium is 3.1%, the value return premium is 2.2%, and the liquidity premium is 3.3%. The risk-free rate is 3.4%. The market, size, relative value, and liquidity betas for Devon are 0.7, -0.3, 1.4, and 1.2, respectively. In estimating the appropriate equity risk premium, Lear has chosen to use the Gordon growth model.
Lear's assistant, Doug Saunders, presents her with a report on macroeconomic multifactor models that includes the following two statements:
Statement 1: Business cycle risk represents the unexpected change in the difference between the return of risky corporate bonds and government bonds.
Statement 2: Confidence risk represents the unexpected change in the level of real business activity.
Lear is also attempting to determine the most appropriate method for determining the required return for Densmore, Inc. (Densmore), a closely held company that is considering a debt issue within the next year.
The company has not previously issued debt securities to the public, relying instead on bank financing.
She realizes that there are a number of models to consider, including the CAPM, multifactor models, and build-up models.
Which of the following approaches/methods is most appropriate for Lear to consider in determining the required return for Densmore?
A. Build-up method.
B. Risk premium approach.
C. Bond-yield plus risk premium method.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
The build-up method is usually applied to closely held companies (such as Densmore) where betas are not readily obtainable.
The risk premium approach requires betas for its calculations; betas are generally not readily available for closely held companies.The bond-yield plus risk premium method is appropriate only if the company has publicly traded debt. The method simply adds a risk premium to the yield to maturity of the company's long- term debt. (Study Session 10, LOS 35-d)

NEW QUESTION: 4

A. Option B
B. Option D
C. Option A
D. Option C
Answer: C