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NEW QUESTION: 1
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.
Are Saunders' statements regarding the macroeconomic multifactor models correct?
A. Only Statement I is correct.
B. Both statements are incorrect.
C. Only Statement 2 is correct.
Answer: B
Explanation:
Explanation/Reference:
Explanation:
Neither of Saunder's statements is correct. Confidence risk represents the unexpected change in the difference between the return of risky corporate bonds and corporate bonds. Business cycle risk represents the unexpected change in the level of real business activity. (Study Session 10, LOS 35.d)

NEW QUESTION: 2
Refer to the exhibit. If the hubs in the graphic were replaced by switches, what would be virtually eliminated?

A. broadcast domains
B. repeater domains
C. Ethernet broadcasts
D. signal amplification
E. Ethernet collisions
Answer: E
Explanation:
Modern wired networks use a network switch to eliminate collisions. By connecting each device directly to a port on the switch, either each port on a switch becomes its own collision domain (in the case of half duplex links) or the possibility of collisions is eliminated entirely in the case of full duplex links.

NEW QUESTION: 3
The decision to add the raw scores together to determine the value of the source is __________ to a decision that each attribute is equally important.
A. dissimilar
B. altered
C. diverse
D. tantamount
Answer: D