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NEW QUESTION: 1
Louisiana Enterprises, an all-equity firm, is considering a new capital investment. Analysis has indicated that the proposed investment has a beta of 0.5 and will generate an expected return of 7 percent. The firm currently has a required return of 10.75 percent and a beta of 1.25. The investment, if undertaken, will double the firm's total assets. If k(RF) = 7 percent and the market return is 10 percent, should the firm undertake the investment?
A. No; the risk of the asset (beta) will increase the firm's beta.
B. Yes; the beta of the asset will reduce the risk of the firm.
C. No; the expected return of the asset is less than the firm's required return, which is 10.75%.
D. No; the expected return of the asset (7%) is less than the required return (8.5%).
E. Yes; the expected return of the asset (7%) exceeds the required return (6.5%).
Answer: D
Explanation:
Explanation/Reference:
Explanation:
Calculate the required return and compare to the expected return.
k(s) = k(RF) + (k(M) - k(RF))b = 0.07 + (0.10 - 0.07)0.5 = 0.085 = 8.5%.
The expected return of the asset (7%) is less than the required return (8.5%) so the investment should not be made.

NEW QUESTION: 2

A. Option A
B. Option D
C. Option B
D. Option C
Answer: B
Explanation:
Resiliency
Storage Spaces supports four types of resiliency:
Simple: A simple storage space writes one copy of your data and does not protect you from driver failures. This option
requires, at least, one drive, and each new additional drive adds another point of failure.
Two-way mirror: This option writes two copies of your data on the drives, which can protect your data from a single
driver failure. Two-way mirror requires a least two drives.
Three-way mirror: This option works similar to the two-way mirror, but it writes three copies of your data on the
drives, which will help you to protect your data from two simultaneous drive failures. Three-way mirror requires, at
least, three drives.
Parity: Similar to the standard RAID 5 technology, Parity for a storage space writes your data with parity information
on the available driver to help you protect your data from a single driver failure. This option requires a least three
drivers.


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