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NEW QUESTION: 1
A change from the cost approach to the market approach of measuring fair value is considered to be what
type of accounting change?
A. Change in accounting principle.
B. Change in accounting estimate.
C. Change in valuation technique.
D. Error correction.
Answer: B
Explanation:
Choice "a" is correct. A change in the valuation technique used to measure fair value is a change in
accounting estimate. Choice "b" is incorrect. Per SFAS No. 157, a change in valuation technique is a
change in accounting estimate, not a change in accounting principal. Choice "c" is incorrect. Although a
change from the cost approach to the market approach is a change in valuation technique, a change in
valuation technique is not defined as a type of accounting change, but instead falls into the category of
changes in accounting estimate. Choice "d" is incorrect. Both the market approach and the cost approach
are acceptable methods of measuring fair value per SFAS No. 157; therefore, switching between these
methods is not the correction of an error. Additionally, an error correction is not a type of accounting
change.
NEW QUESTION: 2
A benefits enrollment company is hosting a 3-tier web application running in a VPC on AWS which includes a NAT (Network Address Translation) instance in the public Web tier. There is enough provisioned capacity for the expected workload tor the new fiscal year benefit enrollment period plus some extra overhead Enrollment proceeds nicely for two days and then the web tier becomes unresponsive, upon investigation using CloudWatch and other monitoring tools it is discovered that there is an extremely large and unanticipated amount of inbound traffic coming from a set of 15 specific IP addresses over port 80 from a country where the benefits company has no customers. The web tier instances are so overloaded that benefit enrollment administrators cannot even SSH into them.
Which activity would be useful in defending against this attack?
A. Create an inbound NACL (Network Access control list) associated with the web tier subnet with deny rules to block the attacking IP addresses
B. Create a custom route table associated with the web tier and block the attacking IP addresses from the IGW (Internet Gateway)
C. Create 15 Security Group rules to block the attacking IP addresses over port 80
D. Change the EIP (Elastic IP Address) of the NAT instance in the web tier subnet and update the Main Route Table with the new EIP
Answer: A
Explanation:
Explanation
Use AWS Identity and Access Management (IAM) to control who in your organization has permission to create and manage security groups and network ACLs (NACL). Isolate the responsibilities and roles for better defense. For example, you can give only your network administrators or security admin the permission to manage the security groups and restrict other roles.
NEW QUESTION: 3
Flood Motors is an all-equity firm with 200,000 shares outstanding. The company's EBIT is $2,000,000 and is expected to remain constant over time. The company pays out all of its earnings each year, so its earnings per share equals its dividends per share. The company's tax rate is 40 percent. The company is considering issuing $2 million worth of bonds (at par) and using the proceeds for a stock repurchase. If issued, the bonds would have an estimated yield to maturity of 10 percent. The risk-free rate in the economy is 6.6 percent, and the market risk premium is 6 percent. The company's beta is currently 0.9, but its investment banker's estimate that the company's beta would rise to 1.1 if they proceed with the recapitalization. Assume that the shares are repurchased at a price equal to the stock market price prior to the recapitalization. What would be the company's stock price following the recapitalization?
A. $51.14
B. $53.85
C. $76.03
D. $68.97
E. $56.02
Answer: A
Explanation:
Explanation/Reference:
Explanation:
First, find the company's current cost of capital, dividends per share, and stock price: k = 0.066 + (0.06)0.9
= 12%. To find the stock price, you still need the dividends per share or DPS = ($2,000,000 (1 -
0.4))/200,000 = $6.00. Thus, the stock price is Po = $6.00/0.12 = $50.00. Thus, by issuing $2,000,000 in new debt the company can repurchase $2,000,000/$50.00 = 40,000 shares.
Now after recapitalization, the new cost of capital, DPS, and stock price can be found: k = 0.066 + (0.06)
1.1 = 13.20%. DPS for the remaining (200,000 - 40,000) = 160,000 shares are thus [($2,000,000 - ($2,000,000 x 0.10))(1 - 0.4)]/160,000 = $6.75. And, finally, Po = $6.75/0.132 = $51.14.
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