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NEW QUESTION: 1
If F be the face value of a firm's debt, V the value of its assets and E the market value of equity, then according to the option pricing approach a default on debt occurs when:
A. F < V
B. V < E
C. F - E < V
D. F > V
Answer: D
Explanation:
Explanation
According to the option pricing approach developed by Merton, the shareholders of a firm have a put on the assets of the firm where the strike price is equal to the face value of the firm's debt. This is just a more complicated way of saying that the debt holders are entitled to all the assets of the firm if these assets are insufficient to pay off the debts, and because of limited liability of the shareholders of a corporation this part payment will fully extinguish the debt.
A firm will default on its debt if the value of the assets falls below the face value of the debt. Therefore Choice
'a' is the correct answer. All other choices are incorrect.
(There are two ways to consider this sort of optionality, and I have mentioned only one for this question:
1. The equity holders can sell the assets of the firm to the debt holders at a price equal to the face value of the debt, ie a put. (ie they can extinguish their liability to the debt holders in full by handing them the assets of the firm, effectively selling them the assets at the value of the debt)
2. The equity holders have a long position in a call option where they can keep the assets of the firm by paying a price equal to the face value of the debt (ie, they can pay off the debt holders and keep the assets) For this question, perspective 1 applies but you should be aware of the second one too as a question may reference that view point.)

NEW QUESTION: 2
Your network contains an Active Directory domain. All client computers run Windows XP Service Pack 3 (SP3). The domain contains a member server named Server1 that runs Windows Server 2008 R2.
On Server1, you create a connection security rule that requires authentication for inbound and outbound connections. You configure the connection security rule to use Kerberos authentication.
You need to ensure that the client computers can connect to Server1. The solution must ensure that all connections to Server1 are encrypted.
What should you do?
A. From a Group Policy object (GPO), enable the Client (Respond Only) IPSec policy on all client computers.
B. From the Windows Firewall with Advanced Security console, create an inbound rule on Server1.
C. From the Windows Firewall with Advanced Security console, create an outbound rule on Server1.
D. From a Group Policy object (GPO), configure the Network Security: LDAP client signing requirements policy setting for all client computers.
Answer: A

NEW QUESTION: 3
Which three protocols can use enhanced object tracking? (Choose three.)
A. DHCP
B. Proxy-ARP
C. VRRP
D. NTP
E. GLBP
F. HSRP
Answer: C,E,F
Explanation:
The Enhanced Object Tracking feature separates the tracking mechanism from HSRP and creates a separate
standalone tracking process that can be used by other processes and HSRP. This feature allows tracking of other
objects in addition to the interface line-protocol state.
A client process such as HSRP, Virtual Router Redundancy Protocol (VRRP), or Gateway Load Balancing Protocol
(GLBP), can register its interest in tracking objects and then be notified when the tracked object changes state.
Reference: http://www.cisco.com/c/en/us/td/docs/ios-xml/ios/ipapp/configuration/15-mt/iap-15-mt-book/iap-
eot.html