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NEW QUESTION: 1
Arizona Rock, an all-equity firm, currently has a beta of 1.25, and k(RF) = 7 percent and k(M) = 14 percent.
Suppose the firm sells 10 percent of its assets (beta = 1.25) and purchases the same proportion of new assets with a beta of 1.1. What will be the firm's new overall required rate of return, and what rate of return must the new assets produce in order to leave the stock price unchanged?
A. 14.750%; 15.750%
B. 15.645%; 15.645%
C. 15.750%; 15.645%
D. 15.645%; 14.700%
E. 15.750%; 14.700%
Answer: D
Explanation:
Explanation/Reference:
Explanation:
b(old, firm) = 1.25.
k(old, firm) = 0.07 + (14 - 7)1.25 = 15.75%.
b(new, firm) = 0.9(1.25) + 0.1(1.1) = 1.235.
k(new, firm) = 0.07 + 1.235(0.07) = 15.645%.
k(new, assets) = 0.07 + 1.1(0.07) = 14.7%.
NEW QUESTION: 2
Which of the following would not be appropriate for inclusion in the TOGAF Technical Reference Model's taxonomy of platform services?
A. naming and directory
B. data management
C. audit
D. internationalization
E. reliability
Answer: E
NEW QUESTION: 3
Out of the striping options available for the EBS volumes, which one has the following disadvantage:
'Doubles the amount of I/O required from the instance to EBS compared to RAID 0, because you're
mirroring all writes to a pair of volumes, limiting how much you can stripe.' ?
A. Raid 2
B. RAID 1+0 (RAID 10)
C. Raid 1
D. Raid 0
Answer: B
Explanation:
RAID 1+0 (RAID 10) doubles the amount of I/O required from the instance to EBS compared to RAID 0,
because you're mirroring all writes to a pair of volumes, limiting how much you can stripe.
Reference: http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/raid-config.html